Based on fresh analysis, the typical employee in the UK would have to work half a century of earnings to attain the net worth of the richest 10% nationwide.
Widening Wealth Gap Through the Years
This research examined wealth distribution statistics covering the Covid pandemic period and found that back in 2006-08, it would have required 38 years of typical employment income to join the top 10th of the wealth distribution.
A research lead part of the report commented: "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 reach the top of the economic scale."
Measuring the Wealth Divide
The study revealed that the disparity between the assets of the average person and a person belonging to the wealthiest decile was £1m in 2006-08, but had expanded to £1.3 million in inflation-adjusted terms by the pandemic years.
The economist further stated: "These disparities are doubly concerning as wealth mobility in Britain is restricted – those who commence life affluent tend to remain affluent, and vice versa."
Relative Wealth Inequality
Despite the financial disparity expanding in absolute terms, the portion of overall assets in the UK held by the most affluent homes – known as "proportional economic disparity" – has been "largely unchanged since the 1980s," per the study.
During this period, total wealth in the UK surged from three times the gross domestic product, to almost 7.5 times.
Contributors of Financial Divide
Termed "automatic" increases, via increasing property values and adjustments to pension valuations, were the primary factors of the widening wealth gap from 2010 onward, as stated in the analysis.
These increases tended to accrue to elderly homeowners, the research shows – worsening the intergenerational wealth divide.
Intergenerational Wealth Disparities
The typical financial disparity between thirty-somethings and those in their early 60s more than doubled in inflation-adjusted terms, from 135 thousand pounds in 2006-08, to £310,000.
Geographic Variations
Furthermore, the study revealed stark area-based disparities, with the median value of net worth in 2020-22 standing at £290,000 in south-east England, where real estate values have typically increased quickly, versus £110,000 in the north-east.
COVID Era Impact
During the pandemic, when numerous employees were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the data shows numerous families were in a position to set aside money, increasing their wealth.
More affluent homes achieved superior outcomes, however. "The typical family in the lowest-income quintile saw their cash reserves increase by just £80 over the pandemic period (2019-20 to 2021-22), approximately equivalent to the pre-crisis period. On the other hand, the typical family in the highest income quintile saw their liquid savings rise by £4,200," the report finds.
