Based on recent analysis, the average earner in the UK would need over five decades of earnings to attain the financial standing of the most affluent 10% of the population.
Growing Economic Disparity Through the Years
The analysis examined wealth distribution data covering the Covid pandemic period and determined that during the pre-financial crisis era, it would have required 38 years' worth of typical employment income to enter the wealthiest decile of the wealth distribution.
A senior economist part of the report commented: "Wealth gaps in Britain are presently so substantial that a typical full-time employee saving all their earnings across their entire working life would continue to be incapable to achieve the peak of the economic scale."
Assessing the Financial Disparity
The study discovered that the gap between the wealth of the average person and an individual in the top 10% was £1 million in the pre-crisis period, but had expanded to £1.3m in inflation-adjusted terms by recent times.
The researcher further stated: "These differences are doubly concerning as wealth mobility in Britain is low – people that start life well-off tend to stay wealthy, and the opposite holds true."
Relative Wealth Inequality
Even with the financial disparity expanding in actual numbers, the percentage of overall assets in the UK owned by the wealthiest families – known as "proportional economic disparity" – has been "broadly stable since the 1980s era," as stated in the research.
During this period, overall assets in the UK rose substantially from three times the annual GDP, to nearly seven and a half times.
Drivers of Wealth Inequality
So-called "passive" appreciation, through growing real estate costs and changes in retirement fund assessments, were the key contributors of the widening wealth gap from 2010 onward, per the analysis.
These gains typically went to elderly homeowners, the analysis reveals – intensifying the generational financial disparity.
Intergenerational Financial Divides
The average wealth gap between thirty-somethings and people aged 60-64 more than doubled in inflation-adjusted terms, from £135k in the mid-2000s, to 310 thousand pounds.
Geographic Variations
There were also pronounced regional variations, with the average level of wealth in recent years amounting to £290k in the southeastern region, where real estate values have generally grown substantially, compared with £110k in the northeastern region.
Health Crisis Years Impact
Throughout the COVID period, when millions of workers were supported by the public-funded employment protection, and health crisis restrictions curtailed consumption options, the data shows numerous families were in a position to set aside money, growing their net worth.
Higher-income households fared much better, however. "The median home in the poorest fifth saw their liquid savings rise by merely £80 over the pandemic period (across the pandemic timeframe), broadly the same as the 24 months before COVID. On the other hand, the median home in the highest income quintile saw their liquid savings rise by £4,200," the analysis concludes.
