According to recent research, the median employee in the UK would require over five decades of earnings to reach the financial standing of the most affluent 10% nationwide.
Growing Economic Disparity Through the Years
The study examined net worth information from the recent health crisis years and found that during the pre-financial crisis era, it would have required nearly four decades of median full-time earnings to enter the wealthiest decile of the wealth distribution.
A research lead associated with the analysis observed: "Economic disparities in Britain are currently so significant that a regular employee setting aside their entire income during their working years would still not be able to achieve the peak of the economic scale."
Quantifying the Financial Disparity
The research revealed that the gap between the net worth of the typical individual and someone in the richest segment was £1 million in the pre-crisis period, but had increased to £1.3 million in inflation-adjusted terms by the pandemic years.
The economist continued: "These disparities are doubly concerning as wealth mobility in Britain is restricted – people that start life wealthy tend to continue being rich, and vice versa."
Comparative Financial Divide
Although the economic divide growing in absolute terms, the percentage of total wealth in the UK held by the wealthiest families – called "relative wealth inequality" – has been "broadly stable since the 1980s era," according to the analysis.
During this period, total wealth in the UK rose substantially from three times the yearly economic output, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "passive" gains, through growing real estate costs and variations in retirement fund assessments, were the primary factors of the widening wealth gap since 2010, per the report.
These increases tended to accrue to older, property-owning households, the research shows – intensifying the age-based economic gap.
Intergenerational Financial Divides
The average wealth gap between thirty-somethings and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135,000 in 2006-08, to £310k.
Area-Based Differences
Furthermore, the study revealed significant regional variations, with the average level of wealth in the pandemic period reaching 290 thousand pounds in south-east England, where real estate values have generally grown substantially, compared with 110 thousand pounds in the north-east.
Health Crisis Years Effects
Throughout the COVID period, when numerous employees were protected by the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the data shows countless homes were in a position to set aside money, increasing their wealth.
Higher-income households fared much better, though. "The average household in the poorest fifth saw their available funds 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 typical family in the wealthiest fifth saw their liquid savings grow by 4,200 pounds," the report finds.
