According to new study, the typical worker in the UK would need 52 years' worth of income to reach the financial standing of the most affluent 10% nationwide.
Expanding Wealth Gap Over Time
This research reviewed wealth distribution statistics from the Covid pandemic period and found that during the mid-2000s, it would have taken 38 years' worth of average worker salary to join the richest segment of the financial hierarchy.
A senior economist part of the study observed: "Economic disparities in Britain are now so large that a regular employee saving all their earnings during their working years would continue to be incapable to achieve the peak of the wealth ladder."
Quantifying the Financial Disparity
The study found that the gap between the assets of the average person and a person belonging to the richest segment was one million pounds in 2006-08, but had increased to 1.3 million pounds in actual value by the pandemic years.
The analyst further stated: "These gaps are doubly concerning as wealth mobility in Britain is restricted – people that start life well-off tend to continue being rich, and conversely applies."
Proportional Economic Disparity
Although the economic divide growing in actual numbers, the share of complete net worth in the UK held by the wealthiest families – called "comparative financial divide" – has been "mostly consistent since the 1980s," per the research.
During this period, total wealth in the UK surged from thrice the gross domestic product, to nearly seven and a half times.
Factors of Wealth Inequality
Referred to as "automatic" increases, via growing real estate costs and adjustments to pension valuations, were the main drivers of the expanding economic divide over the past decade, according to the study.
These increases generally flowed to older, property-owning households, the study demonstrates – worsening the intergenerational wealth divide.
Age-Based Economic Gaps
The average wealth gap between people in their early 30s and people aged 60-64 increased over twofold in real terms, from £135,000 in 2006-08, to £310,000.
Area-Based Differences
Additionally, there were pronounced area-based disparities, with the typical amount of wealth in recent years reaching £290k in south-east England, where property prices have typically increased quickly, versus £110k in the NE of England.
Pandemic Period Impact
During the pandemic, when countless laborers were supported by the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the statistics indicate many households were able to save, increasing their wealth.
More affluent homes performed significantly better, though. "The average household in the lowest-income quintile saw their cash reserves increase by just £80 throughout the health crisis (from 2019 to 2022), broadly the same as the two years pre-pandemic. Conversely, the average household in the highest income quintile saw their liquid savings increase by £4,200," the analysis concludes.
