According to new study, the typical employee in the UK would require over five decades of earnings to attain the financial standing of the wealthiest 10% nationwide.
Expanding Economic Disparity Over Time
The study analyzed wealth distribution information from the Covid pandemic period and found that during 2006-08, it would have taken nearly four decades of average worker salary to enter the richest segment of the economic ladder.
A research lead part of the analysis stated: "Financial divides in Britain are currently so significant that a typical full-time employee accumulating their complete salary during their working years would still not be able to attain the highest level of the wealth ladder."
Assessing the Wealth Divide
The analysis revealed that the disparity between the net worth of the median citizen and a person belonging to the wealthiest decile was £1 million in 2006-08, but had increased to £1.3m in inflation-adjusted terms by the pandemic years.
The economist added: "These differences are especially alarming as financial progression in Britain is low – people that start life affluent tend to continue being rich, and the opposite holds true."
Relative Wealth Inequality
Although the economic divide expanding in absolute terms, the percentage of total wealth in the UK possessed by the richest households – termed "comparative financial divide" – has been "largely unchanged since the eighties," as stated in the analysis.
During this period, total wealth in the UK increased dramatically from triple the annual GDP, to nearly seven and a half times.
Drivers of Wealth Inequality
So-called "automatic" appreciation, by means of growing real estate costs and changes in pension valuations, were the primary factors of the expanding economic divide from 2010 onward, per the study.
These appreciations tended to accrue to older, property-owning households, the research shows – intensifying the generational financial disparity.
Intergenerational Financial Divides
The average wealth gap between thirty-somethings and people aged 60-64 more than doubled in inflation-adjusted terms, from £135,000 in the mid-2000s, to £310k.
Area-Based Disparities
There were also significant geographic differences, with the median value of wealth in the pandemic period amounting to £290,000 in the SE of England, where housing costs have typically increased quickly, versus £110k in the north-east.
Pandemic Period Effects
Throughout the COVID period, when millions of workers were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the data shows countless homes were in a position to set aside money, enhancing their financial standing.
Higher-income households fared much better, nevertheless. "The median home in the bottom income bracket saw their available funds grow by only eighty pounds over the pandemic period (2019-20 to 2021-22), roughly identical to the two years pre-pandemic. In contrast, the median home in the highest income quintile saw their available funds increase by £4,200," the analysis concludes.
