Per new research, the typical worker in the UK would require half a century of salary to attain the wealth level of the wealthiest 10% of the population.
Growing Economic Disparity Over Time
This research reviewed financial assets statistics from the 2020-22 timeframe and discovered that in the pre-financial crisis era, it would have required nearly four decades of average worker salary to enter the richest segment of the economic ladder.
A research lead associated with the study observed: "Wealth gaps in Britain are now so large that a typical full-time employee setting aside their entire income during their working years would remain unable to attain the highest level of the wealth ladder."
Assessing the Economic Gap
The analysis found that the gap between the wealth of the average person and a person belonging to the top 10% was one million pounds in the mid-2000s, but had widened to £1.3 million in inflation-adjusted terms by 2020-22.
The analyst further stated: "These gaps are particularly worrying as economic movement in Britain is limited – individuals who begin life well-off tend to continue being rich, and conversely applies."
Relative Wealth Inequality
Although the economic divide growing in absolute terms, the percentage of overall assets in the UK possessed by the wealthiest families – called "proportional economic disparity" – has been "mostly consistent since the eighties," per the analysis.
During this period, total wealth in the UK surged from three times the yearly economic output, to approximately 7.5x.
Factors of Financial Divide
So-called "passive" gains, by means of increasing property values and changes in retirement fund assessments, were the main drivers of the expanding economic divide since 2010, as stated in the analysis.
These appreciations tended to accrue to older, property-owning households, the analysis reveals – exacerbating the age-based economic gap.
Age-Based Economic Gaps
The median economic difference between individuals aged 30-34 and those in their early 60s more than doubled in inflation-adjusted terms, from £135k in the mid-2000s, to £310k.
Area-Based Differences
There were also pronounced regional variations, with the average level of wealth in recent years amounting to 290 thousand pounds in the SE of England, where property prices have typically increased quickly, compared with 110 thousand pounds in the NE of England.
Health Crisis Years Impact
Amid the health crisis, when numerous employees were covered under the taxpayer-backed furlough scheme, and health crisis restrictions limited opportunities for spending, the data shows countless homes were in a position to set aside money, growing their net worth.
More affluent homes achieved superior outcomes, however. "The median home in the poorest fifth saw their cash reserves rise by merely £80 during the COVID years (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. In contrast, the median home in the highest income quintile saw their liquid savings grow by 4,200 pounds," the study reveals.
