According to new research, the median employee in the UK would need 52 years' worth of earnings to reach the wealth level of the most affluent 10% in the country.
Expanding Wealth Gap Through the Years
This research analyzed financial assets information from the Covid pandemic period and discovered that in 2006-08, it would have required 38 years' worth of average worker salary to enter the top 10th of the wealth distribution.
A research lead associated with the report stated: "Financial divides in Britain are now so large that a average worker setting aside their entire income across their entire working life would still not be able to reach the top of the economic scale."
Quantifying the Financial Disparity
The study found that the disparity between the net worth of the median citizen and a person belonging to the richest segment was £1 million in the pre-crisis period, but had widened to 1.3 million pounds in inflation-adjusted terms by the pandemic years.
The economist continued: "These differences are particularly worrying as wealth mobility in Britain is restricted – individuals who begin life affluent tend to continue being rich, and the opposite holds true."
Comparative Financial Divide
Despite the economic divide expanding in absolute terms, the share of total wealth in the UK held by the most affluent homes – called "proportional economic disparity" – has been "mostly consistent since the eighties," as stated in the analysis.
Over this timeframe, complete net worth in the UK surged from triple the annual GDP, to almost 7.5 times.
Factors of Financial Divide
Termed "automatic" appreciation, via rising house prices and variations in retirement fund assessments, were the main drivers of the growing financial disparity from 2010 onward, according to the study.
These gains typically went to elderly homeowners, the study demonstrates – intensifying the intergenerational wealth divide.
Intergenerational Financial Divides
The typical financial disparity between individuals aged 30-34 and people aged 60-64 increased over twofold in real terms, from £135k in 2006-08, to £310,000.
Regional Disparities
There were also stark geographic differences, with the median value of wealth in recent years reaching 290 thousand pounds in south-east England, where property prices have typically increased quickly, as opposed to £110,000 in the NE of England.
Health Crisis Years Consequences
Throughout the COVID period, when millions of workers were protected by the government-supported job retention program, and Covid shutdowns curtailed consumption options, the statistics indicate many households were capable of accumulating, increasing their wealth.
Higher-income households fared much better, though. "The median home in the lowest-income quintile saw their cash reserves rise by merely £80 during the COVID years (across the pandemic timeframe), broadly the same as the pre-crisis period. In contrast, the typical family in the top income bracket saw their cash reserves grow by 4,200 pounds," the analysis concludes.
