Based on fresh research, the average worker in the UK would need half a century of salary to reach the financial standing of the wealthiest 10% of the population.
Widening Wealth Gap Through the Years
This research analyzed financial assets information covering the Covid pandemic period and discovered that back in the mid-2000s, it would have taken nearly four decades of average worker salary to reach the top 10th of the wealth distribution.
An economic expert involved with the analysis commented: "Wealth gaps in Britain are presently so substantial that a typical full-time employee setting aside their entire income throughout their career would still not be able to reach the top of the wealth ladder."
Quantifying the Economic Gap
The analysis discovered that the difference between the net worth of the average person and a person belonging to the wealthiest decile was one million pounds in 2006-08, but had expanded to £1.3 million in inflation-adjusted terms by recent times.
The researcher continued: "These gaps are especially alarming as wealth mobility in Britain is limited – those who commence life well-off tend to continue being rich, and vice versa."
Relative Wealth Inequality
Although the financial disparity growing in absolute terms, the percentage of total wealth in the UK held by the wealthiest families – termed "comparative financial divide" – has been "largely unchanged since the 1980s era," according to the study.
During this period, complete net worth in the UK surged from triple the gross domestic product, to approximately 7.5x.
Contributors of Wealth Inequality
Termed "passive" increases, by means of increasing property values and changes in retirement fund assessments, were the primary factors of the expanding economic divide over the past decade, per the analysis.
These increases typically went to senior citizens with real estate, the research shows – exacerbating the age-based economic gap.
Intergenerational Economic Gaps
The typical financial disparity between individuals aged 30-34 and those in their early 60s increased over twofold in real terms, from £135,000 in the mid-2000s, to £310k.
Area-Based Disparities
Additionally, there were significant area-based disparities, with the median value of net worth in the pandemic period reaching 290 thousand pounds in the southeastern region, where property prices have generally grown substantially, versus £110,000 in the northeastern region.
Health Crisis Years Consequences
Amid the health crisis, when millions of workers were supported by the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the data shows countless homes were in a position to set aside money, enhancing their financial standing.
Higher-income households fared much better, nevertheless. "The median home in the lowest-income quintile saw their cash reserves increase by just £80 during the COVID years (from 2019 to 2022), broadly the same as the 24 months before COVID. On the other hand, the median home in the highest income quintile saw their cash reserves grow by 4,200 pounds," the analysis concludes.