Per fresh study, the typical worker in the UK would require half a century of earnings to achieve the net worth of the richest 10% in the country.
Widening Economic Disparity Across Decades
The analysis reviewed wealth distribution information covering the Covid pandemic period and found that in the pre-financial crisis era, it would have required nearly four decades of typical employment income to join the richest segment of the economic ladder.
A research lead part of the analysis commented: "Wealth gaps in Britain are presently so substantial that a average worker accumulating their complete salary throughout their career would remain unable to attain the highest level of the wealth ladder."
Measuring the Economic Gap
The analysis discovered that the disparity between the wealth of the typical individual and someone in the wealthiest decile was £1m in 2006-08, but had increased to £1.3m in inflation-adjusted terms by the pandemic years.
The researcher continued: "These disparities are especially alarming as wealth mobility in Britain is limited – those who commence life wealthy tend to continue being rich, and conversely applies."
Relative Wealth Inequality
Although the financial disparity expanding in absolute terms, the percentage of total wealth in the UK possessed by the richest households – called "proportional economic disparity" – has been "broadly stable since the eighties," per the research.
Over this timeframe, total wealth in the UK increased dramatically from triple the gross domestic product, to almost 7.5 times.
Drivers of Financial Divide
Referred to as "passive" appreciation, via rising house prices and changes in pension valuations, were the main drivers of the widening wealth gap from 2010 onward, per the analysis.
These appreciations tended to accrue to elderly homeowners, the analysis reveals – intensifying the intergenerational wealth divide.
Generational Financial Divides
The median economic difference between people in their early 30s and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to 310 thousand pounds.
Geographic Differences
There were also pronounced geographic differences, with the average level of net worth in the pandemic period reaching £290,000 in the SE of England, where housing costs have generally grown substantially, compared with £110,000 in the NE of England.
Pandemic Period Consequences
Amid the health crisis, when numerous employees were supported by the government-supported job retention program, and pandemic lockdowns curtailed consumption options, the data shows numerous families were in a position to set aside money, increasing their wealth.
More affluent homes achieved superior outcomes, though. "The median home in the bottom income bracket saw their liquid savings increase by just £80 throughout the health crisis (2019-20 to 2021-22), broadly the same as the 24 months before COVID. In contrast, the typical family in the top income bracket saw their liquid savings rise by £4,200," the analysis concludes.
