Based on new study, the typical employee in the UK would need half a century of income to achieve the net worth of the wealthiest 10% of the population.
Widening Financial Divide Across Decades
This research analyzed financial assets statistics covering the recent health crisis years and found that back in the pre-financial crisis era, it would have taken nearly four decades of average worker salary to join the top 10th of the wealth distribution.
A senior economist associated with the analysis stated: "Economic disparities in Britain are currently so significant that a regular employee accumulating their complete salary throughout their career would continue to be incapable to achieve the peak of the economic scale."
Quantifying the Wealth Divide
The analysis found that the disparity between the wealth of the average person and a person belonging to the wealthiest decile was £1m in the pre-crisis period, but had increased to £1.3m in actual value by the pandemic years.
The researcher further stated: "These differences are particularly worrying as economic movement in Britain is limited – those who commence life affluent tend to continue being rich, and vice versa."
Relative Wealth Inequality
Although the financial disparity widening in specific figures, the percentage of complete net worth in the UK possessed by the richest households – called "relative wealth inequality" – has been "broadly stable since the eighties," per the analysis.
Throughout these years, overall assets in the UK increased dramatically from triple the yearly economic output, to almost 7.5 times.
Contributors of Economic Disparity
So-called "unearned" appreciation, through growing real estate costs and adjustments to pension valuations, were the key contributors of the growing financial disparity over the past decade, according to the study.
These gains generally flowed to elderly homeowners, the research shows – intensifying the intergenerational wealth divide.
Age-Based Economic Gaps
The typical financial disparity between thirty-somethings and sixty-somethings increased over twofold in actual value, from £135k in pre-financial crisis, to £310k.
Area-Based Disparities
Additionally, there were significant geographic differences, with the median value of net worth in the pandemic period amounting to £290,000 in the SE of England, where property prices have generally grown substantially, as opposed to 110 thousand pounds in the north-east.
Pandemic Period Effects
Throughout the COVID period, when numerous employees were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the information reveals many households were able to save, increasing their wealth.
Higher-income households fared much better, nevertheless. "The median home in the lowest-income quintile saw their available funds grow by only eighty pounds during the COVID years (from 2019 to 2022), broadly the same as the two years pre-pandemic. On the other hand, the median home in the wealthiest fifth saw their available funds rise by £4,200," the analysis concludes.
