Per fresh research, the median earner in the UK would need half a century of income to reach the financial standing of the richest 10% of the population.
Expanding Wealth Gap Across Decades
The analysis reviewed wealth distribution data covering the Covid pandemic period and found that in 2006-08, it would have needed nearly four decades of typical employment income to reach the wealthiest decile of the financial hierarchy.
A senior economist part of the study commented: "Financial divides in Britain are now so large that a typical full-time employee accumulating their complete salary across their entire working life would remain unable to reach the top of the financial hierarchy."
Quantifying the Financial Disparity
The research discovered that the difference between the net worth of the median citizen and a person belonging to the richest segment was £1m in the pre-crisis period, but had increased to £1.3m in inflation-adjusted terms by 2020-22.
The analyst further stated: "These disparities are particularly worrying as wealth mobility in Britain is restricted – those who commence life well-off tend to remain affluent, and the opposite holds true."
Relative Wealth Inequality
Even with the economic divide expanding in actual numbers, the share of total wealth in the UK owned by the most affluent homes – known as "comparative financial divide" – has been "largely unchanged since the 1980s," as stated in the research.
Over this timeframe, total wealth in the UK increased dramatically from triple the yearly economic output, to nearly seven and a half times.
Contributors of Financial Divide
Referred to as "unearned" appreciation, by means of increasing property values and changes in retirement fund assessments, were the main drivers of the expanding economic divide from 2010 onward, according to the report.
These increases tended to accrue to elderly homeowners, the research shows – intensifying the generational financial disparity.
Generational Financial Divides
The average wealth gap between people in their early 30s and those in their early 60s increased over twofold in actual value, from £135k in 2006-08, to 310 thousand pounds.
Geographic Disparities
There were also significant area-based disparities, with the average level of net worth in 2020-22 reaching 290 thousand pounds in south-east England, where housing costs have tended to rise rapidly, compared with 110 thousand pounds in the northeastern region.
Health Crisis Years Consequences
Amid the health crisis, when numerous employees were covered under the public-funded employment protection, and Covid shutdowns reduced expenditure possibilities, the statistics indicate many households were capable of accumulating, increasing their wealth.
Wealthier families performed significantly better, though. "The typical family in the poorest fifth saw their liquid savings increase by just £80 during the COVID years (from 2019 to 2022), approximately equivalent to the pre-crisis period. In contrast, the typical family in the top income bracket saw their available funds increase by £4,200," the report finds.
