Based on fresh study, the median employee in the UK would require half a century of income to achieve the wealth level of the wealthiest 10% of the population.
Growing Wealth Gap Over Time
The analysis reviewed wealth distribution information covering the Covid pandemic period and found that back in the mid-2000s, it would have required 38 years' worth of average worker salary to join the richest segment of the financial hierarchy.
A senior economist involved with the study commented: "Wealth gaps in Britain are now so large that a regular employee accumulating their complete salary across their entire working life would continue to be incapable to attain the highest level of the wealth ladder."
Quantifying the Economic Gap
The research revealed that the gap between the net worth of the median citizen and a person belonging to the wealthiest decile was £1m in the mid-2000s, but had expanded to 1.3 million pounds in real terms by 2020-22.
The economist continued: "These differences are doubly concerning as economic movement in Britain is low – people that start life affluent tend to continue being rich, and the opposite holds true."
Comparative Financial Divide
Even with the financial disparity expanding in absolute terms, the portion of total wealth in the UK possessed by the wealthiest families – known as "comparative financial divide" – has been "mostly consistent since the eighties," as stated in the research.
During this period, overall assets in the UK surged from thrice the gross domestic product, to approximately 7.5x.
Factors of Financial Divide
Termed "unearned" increases, through growing real estate costs and changes in pension valuations, were the primary factors of the widening wealth gap over the past decade, as stated in the study.
These appreciations typically went to elderly homeowners, the analysis reveals – worsening the intergenerational wealth divide.
Generational Economic Gaps
The average wealth gap between thirty-somethings and sixty-somethings increased over twofold in actual value, from 135 thousand pounds in the mid-2000s, to £310k.
Geographic Variations
There were also significant geographic differences, with the typical amount of net worth in 2020-22 amounting to £290,000 in south-east England, where real estate values have generally grown substantially, versus 110 thousand pounds in the northeastern region.
Health Crisis Years Effects
Amid the health crisis, when numerous employees were protected by the taxpayer-backed furlough scheme, and Covid shutdowns reduced expenditure possibilities, the data shows many households were in a position to set aside money, enhancing their financial standing.
More affluent homes fared much better, nevertheless. "The average household in the lowest-income quintile saw their cash reserves rise by merely £80 throughout the health crisis (2019-20 to 2021-22), roughly identical to the 24 months before COVID. On the other hand, the average household in the top income bracket saw their liquid savings grow by 4,200 pounds," the report finds.
