According to new analysis, the typical earner in the UK would need half a century of income to achieve the financial standing of the richest 10% of the population.
Widening Economic Disparity Across Decades
The analysis reviewed wealth distribution information covering the Covid pandemic period and discovered that during the pre-financial crisis era, it would have required 38 years of average worker salary to reach the top 10th of the wealth distribution.
A research lead part of the analysis stated: "Financial divides in Britain are presently so substantial that a regular employee setting aside their entire income throughout their career would continue to be incapable to achieve the peak of the wealth ladder."
Quantifying the Wealth Divide
The study revealed that the disparity between the assets of the average person and a person belonging to the wealthiest decile was £1m in the pre-crisis period, but had expanded to £1.3m in real terms by 2020-22.
The analyst further stated: "These disparities are especially alarming as economic movement in Britain is limited – individuals who begin life well-off tend to continue being rich, and vice versa."
Relative Wealth Inequality
Although the economic divide growing in absolute terms, the portion of total wealth in the UK possessed by the most affluent homes – known as "proportional economic disparity" – has been "mostly consistent since the 1980s era," as stated in the analysis.
Over this timeframe, total wealth in the UK increased dramatically from three times the gross domestic product, to nearly seven and a half times.
Contributors of Wealth Inequality
So-called "passive" gains, by means of increasing property values and variations in retirement fund assessments, were the key contributors of the expanding economic divide over the past decade, according to the report.
These increases typically went to elderly homeowners, the research shows – exacerbating the intergenerational wealth divide.
Age-Based Wealth Disparities
The average wealth gap between people in their early 30s and sixty-somethings more than doubled in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to 310 thousand pounds.
Area-Based Variations
Additionally, there were pronounced regional variations, with the average level of wealth in 2020-22 standing at £290,000 in the SE of England, where housing costs have tended to rise rapidly, compared with £110,000 in the north-east.
Health Crisis Years Consequences
During the pandemic, when countless laborers were supported by the government-supported job retention program, and pandemic lockdowns curtailed consumption options, the data shows countless homes were able to save, increasing their wealth.
Wealthier families achieved superior outcomes, however. "The average household in the poorest fifth saw their cash reserves rise by merely £80 throughout the health crisis (across the pandemic timeframe), broadly the same as the pre-crisis period. Conversely, the average household in the wealthiest fifth saw their liquid savings increase by £4,200," the study reveals.
