According to fresh study, the median employee in the UK would have to work over five decades of earnings to achieve the financial standing of the wealthiest 10% in the country.
Widening Economic Disparity Across Decades
The study examined financial assets information from the recent health crisis years and found that in the pre-financial crisis era, it would have needed 38 years of typical employment income to reach the richest segment of the financial hierarchy.
A research lead involved with the study stated: "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 attain the highest level of the economic scale."
Assessing the Wealth Divide
The study revealed that the difference between the assets of the average person and someone in the richest segment was £1 million in the pre-crisis period, but had expanded to £1.3m in inflation-adjusted terms by the pandemic years.
The researcher continued: "These gaps are doubly concerning as financial progression in Britain is limited – individuals who begin life well-off tend to stay wealthy, and the opposite holds true."
Proportional Economic Disparity
Although the wealth gap widening in absolute terms, the share of overall assets in the UK possessed by the richest households – called "proportional economic disparity" – has been "largely unchanged since the eighties," as stated in the study.
Throughout these years, overall assets in the UK rose substantially from thrice the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
Referred to as "automatic" increases, via increasing property values and variations in superannuation evaluations, were the key contributors of the expanding economic divide over the past decade, per the study.
These gains typically went to older, property-owning households, the research shows – intensifying the age-based economic gap.
Intergenerational Financial Divides
The average wealth gap between thirty-somethings and those in their early 60s increased over twofold in inflation-adjusted terms, from 135 thousand pounds in 2006-08, to £310k.
Regional Disparities
There were also significant geographic differences, with the typical amount of assets in the pandemic period standing at £290,000 in south-east England, where housing costs have tended to rise rapidly, as opposed to £110k in the NE of England.
Pandemic Period Effects
Throughout the COVID period, when millions of workers were protected by the government-supported job retention program, and pandemic lockdowns reduced expenditure possibilities, the statistics indicate many households were able to save, enhancing their financial standing.
Wealthier families fared much better, though. "The typical family in the lowest-income quintile saw their liquid savings rise by merely £80 during the COVID years (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. On the other hand, the median home in the top income bracket saw their available funds increase by £4,200," the report finds.
