According to recent analysis, the typical earner in the UK would require half a century of earnings to attain the wealth level of the wealthiest 10% in the country.
Expanding Wealth Gap Through the Years
The study reviewed net worth data from the Covid pandemic period and found that in the mid-2000s, it would have needed 38 years' worth of median full-time earnings to join the top 10th of the economic ladder.
A senior economist part of the study commented: "Wealth gaps in Britain are currently so significant that a regular employee setting aside their entire income across their entire working life would remain unable to reach the top of the wealth ladder."
Measuring the Wealth Divide
The study revealed that the difference between the net worth of the median citizen and someone in the top 10% was £1m in the pre-crisis period, but had increased to 1.3 million pounds in inflation-adjusted terms by recent times.
The analyst added: "These differences are doubly concerning as wealth mobility in Britain is low – individuals who begin life affluent tend to remain affluent, and the opposite holds true."
Proportional Economic Disparity
Although the wealth gap widening in actual numbers, the share of total wealth in the UK held by the most affluent homes – known as "comparative financial divide" – has been "broadly stable since the 1980s era," per the study.
Over this timeframe, complete net worth in the UK surged from triple the gross domestic product, to approximately 7.5x.
Contributors of Wealth Inequality
Termed "unearned" appreciation, by means of increasing property values and changes in superannuation evaluations, were the key contributors of the growing financial disparity over the past decade, as stated in the study.
These appreciations generally flowed to older, property-owning households, the analysis reveals – intensifying the generational financial disparity.
Generational Financial Divides
The average wealth gap between individuals aged 30-34 and sixty-somethings grew by more than 100% in actual value, from 135 thousand pounds in pre-financial crisis, to £310,000.
Regional Variations
Additionally, there were pronounced area-based disparities, with the median value of assets in the pandemic period amounting to 290 thousand pounds in the SE of England, where housing costs have tended to rise rapidly, versus £110,000 in the north-east.
COVID Era Consequences
Amid the health crisis, when millions of workers were covered under the government-supported job retention program, and health crisis restrictions curtailed consumption options, the data shows many households were capable of accumulating, growing their net worth.
Higher-income households achieved superior outcomes, however. "The median home in the bottom income bracket saw their cash reserves rise by merely £80 over the pandemic period (across the pandemic timeframe), roughly identical to the pre-crisis period. In contrast, the median home in the wealthiest fifth saw their liquid savings increase by £4,200," the study reveals.
