Per new analysis, the typical earner in the UK would have to work half a century of earnings to attain the wealth level of the most affluent 10% of the population.
Widening Economic Disparity Over Time
The analysis reviewed net worth statistics covering the recent health crisis years and discovered that in the pre-financial crisis era, it would have needed 38 years of median full-time earnings to enter the top 10th of the wealth distribution.
A senior economist associated with the analysis observed: "Economic disparities in Britain are now so large that a typical full-time employee setting aside their entire income during their working years would remain unable to achieve the peak of the financial hierarchy."
Measuring the Wealth Divide
The analysis revealed that the difference between the assets of the median citizen and someone in the top 10% was £1m in the mid-2000s, but had expanded to 1.3 million pounds in real terms by 2020-22.
The researcher added: "These gaps are especially alarming as wealth mobility in Britain is low – people that start life wealthy tend to remain affluent, and vice versa."
Proportional Economic Disparity
Despite the economic divide growing in absolute terms, the share of total wealth in the UK held by the wealthiest families – called "relative wealth inequality" – has been "broadly stable since the 1980s," as stated in the analysis.
During this period, complete net worth in the UK rose substantially from thrice the annual GDP, to nearly seven and a half times.
Contributors of Financial Divide
Termed "passive" appreciation, by means of growing real estate costs and changes in retirement fund assessments, were the primary factors of the widening wealth gap over the past decade, according to the analysis.
These appreciations typically went to older, property-owning households, the analysis reveals – intensifying the intergenerational wealth divide.
Generational Wealth Disparities
The typical financial disparity between people in their early 30s and those in their early 60s grew by more than 100% in inflation-adjusted terms, from £135k in the mid-2000s, to 310 thousand pounds.
Geographic Differences
There were also stark area-based disparities, with the average level of net worth in recent years reaching £290k in the southeastern region, where housing costs have typically increased quickly, as opposed to £110,000 in the northeastern region.
Health Crisis Years Impact
Amid the health crisis, when millions of workers were covered under the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the data shows many households were able to save, growing their net worth.
Wealthier families achieved superior outcomes, though. "The median home in the poorest fifth saw their available funds rise by merely £80 during the COVID years (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. In contrast, the median home in the wealthiest fifth saw their liquid savings increase by £4,200," the report finds.
