According to recent research, the median earner in the UK would require over five decades of salary to attain the wealth level of the most affluent 10% in the country.
Expanding Economic Disparity Through the Years
This research examined net worth data covering the recent health crisis years and found that in the mid-2000s, it would have needed nearly four decades of typical employment income to enter the top 10th of the wealth distribution.
A senior economist involved with the analysis observed: "Economic disparities in Britain are currently so significant that a regular employee saving all their earnings during their working years would remain unable to attain the highest level of the economic scale."
Measuring the Economic Gap
The study discovered that the gap between the wealth of the average person and an individual in the top 10% was one million pounds in the pre-crisis period, but had expanded to £1.3 million in inflation-adjusted terms by 2020-22.
The economist further stated: "These gaps are doubly concerning as financial progression in Britain is low – individuals who begin life affluent tend to continue being rich, and vice versa."
Relative Wealth Inequality
Even with the economic divide widening in specific figures, the portion of total wealth in the UK held by the richest households – known as "relative wealth inequality" – has been "mostly consistent since the 1980s era," according to the analysis.
Over this timeframe, overall assets in the UK increased dramatically from three times the gross domestic product, to approximately 7.5x.
Drivers of Financial Divide
Referred to as "automatic" gains, via rising house prices and changes in retirement fund assessments, were the key contributors of the widening wealth gap over the past decade, according to the study.
These appreciations generally flowed to elderly homeowners, the analysis reveals – intensifying the age-based economic gap.
Age-Based Financial Divides
The average wealth gap between individuals aged 30-34 and people aged 60-64 increased over twofold in real terms, from £135,000 in pre-financial crisis, to £310k.
Regional Differences
Furthermore, the study revealed stark area-based disparities, with the typical amount of wealth in 2020-22 amounting to £290,000 in the southeastern region, where housing costs have generally grown substantially, as opposed to 110 thousand pounds in the northeastern region.
Health Crisis Years Impact
Amid the health crisis, when countless laborers were protected by the public-funded employment protection, and health crisis restrictions reduced expenditure possibilities, the statistics indicate countless homes were capable of accumulating, increasing their wealth.
Wealthier families fared much better, however. "The average household in the lowest-income quintile saw their cash reserves rise by merely £80 during the COVID years (2019-20 to 2021-22), approximately equivalent to the 24 months before COVID. On the other hand, the average household in the highest income quintile saw their cash reserves increase by £4,200," the report finds.
