Based on fresh analysis, the typical employee in the UK would need over five decades of earnings to reach the wealth level of the wealthiest 10% nationwide.
Expanding Wealth Gap Over Time
This research analyzed net worth information covering the recent health crisis years and determined that in 2006-08, it would have taken 38 years' worth of median full-time earnings to join the richest segment of the economic ladder.
A senior economist involved with the analysis commented: "Economic disparities in Britain are now so large that a typical full-time employee saving all their earnings across their entire working life would still not be able to reach the top of the wealth ladder."
Quantifying the Economic Gap
The study discovered that the gap between the net worth of the median citizen and an individual in the richest segment was £1m in the mid-2000s, but had widened to 1.3 million pounds in real terms by 2020-22.
The economist further stated: "These gaps are especially alarming as financial progression in Britain is low – individuals who begin life wealthy tend to remain affluent, and conversely applies."
Proportional Economic Disparity
Although the wealth gap growing in specific figures, the percentage of total wealth in the UK owned by the richest households – known as "proportional economic disparity" – has been "broadly stable since the 1980s," per the analysis.
During this period, complete net worth in the UK rose substantially from triple the gross domestic product, to approximately 7.5x.
Contributors of Economic Disparity
Referred to as "unearned" appreciation, via increasing property values and variations in pension valuations, were the key contributors of the widening wealth gap from 2010 onward, according to the analysis.
These increases tended to accrue to elderly homeowners, the study demonstrates – exacerbating the intergenerational wealth divide.
Age-Based Wealth Disparities
The median economic difference between thirty-somethings and sixty-somethings increased over twofold in inflation-adjusted terms, from £135,000 in pre-financial crisis, to 310 thousand pounds.
Geographic Disparities
Additionally, there were stark geographic differences, with the typical amount of assets in recent years amounting to £290,000 in the SE of England, where housing costs have tended to rise rapidly, compared with £110,000 in the north-east.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the statistics indicate countless homes were capable of accumulating, increasing their wealth.
Higher-income households fared much better, nevertheless. "The average household in the lowest-income quintile saw their liquid savings increase by just £80 throughout the health crisis (from 2019 to 2022), broadly the same as the two years pre-pandemic. Conversely, the median home in the top income bracket saw their available funds grow by 4,200 pounds," the analysis concludes.
