Per new analysis, the average employee in the UK would have to work half a century of income to attain the wealth level of the richest 10% of the population.
Widening Wealth Gap Across Decades
The analysis examined financial assets information covering the Covid pandemic period and determined that back in the mid-2000s, it would have required nearly four decades of median full-time earnings to reach the top 10th of the financial hierarchy.
A research lead part of the report observed: "Wealth gaps in Britain are now so large that a regular employee accumulating their complete salary during their working years would remain unable to attain the highest level of the financial hierarchy."
Measuring the Wealth Divide
The study found that the disparity between the wealth of the typical individual and an individual in the richest segment was £1m in the mid-2000s, but had increased to £1.3 million in inflation-adjusted terms by the pandemic years.
The analyst further stated: "These gaps are doubly concerning as financial progression in Britain is limited – those who commence life well-off tend to stay wealthy, and conversely applies."
Comparative Financial Divide
Although the economic divide growing in absolute terms, the percentage of total wealth in the UK owned by the wealthiest families – called "comparative financial divide" – has been "largely unchanged since the 1980s era," as stated in the study.
During this period, total wealth in the UK increased dramatically from thrice the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
Referred to as "automatic" gains, by means of increasing property values and adjustments to superannuation evaluations, were the primary factors of the widening wealth gap over the past decade, per the report.
These appreciations tended to accrue to elderly homeowners, the study demonstrates – worsening the age-based economic gap.
Age-Based Economic Gaps
The typical financial disparity between thirty-somethings and people aged 60-64 grew by more than 100% in real terms, from £135k in pre-financial crisis, to £310k.
Geographic Disparities
Furthermore, the study revealed stark area-based disparities, with the typical amount of wealth in 2020-22 amounting to 290 thousand pounds in the SE of England, where housing costs have typically increased quickly, compared with £110k in the north-east.
Pandemic Period Consequences
Amid the health crisis, when numerous employees were protected by the government-supported job retention program, and Covid shutdowns curtailed consumption options, the data shows countless homes were capable of accumulating, increasing their wealth.
Wealthier families fared much better, however. "The typical family in the lowest-income quintile saw their available funds increase by just £80 throughout the health crisis (2019-20 to 2021-22), broadly the same as the 24 months before COVID. On the other hand, the median home in the wealthiest fifth saw their liquid savings rise by £4,200," the analysis concludes.
