According to new study, the median earner in the UK would have to work 52 years' worth of earnings to achieve the net worth of the wealthiest 10% in the country.
Widening Financial Divide Across Decades
The study reviewed financial assets data covering the Covid pandemic period and found that back in the mid-2000s, it would have taken 38 years of median full-time earnings to reach the wealthiest decile of the financial hierarchy.
A senior economist involved with the study stated: "Wealth gaps in Britain are presently so substantial that a typical full-time employee accumulating their complete salary during their working years would still not be able to achieve the peak of the wealth ladder."
Assessing the Financial Disparity
The research revealed that the difference between the assets of the median citizen and a person belonging to the top 10% was one million pounds in the pre-crisis period, but had expanded to 1.3 million pounds in inflation-adjusted terms by recent times.
The economist further stated: "These disparities are especially alarming as wealth mobility in Britain is limited – people that start life wealthy tend to stay wealthy, and vice versa."
Relative Wealth Inequality
Even with the financial disparity widening in specific figures, the share of complete net worth in the UK held by the wealthiest families – termed "proportional economic disparity" – has been "largely unchanged since the 1980s era," per the research.
Over this timeframe, total wealth in the UK rose substantially from thrice the gross domestic product, to approximately 7.5x.
Contributors of Wealth Inequality
So-called "unearned" gains, via rising house prices and changes in pension valuations, were the main drivers of the expanding economic divide since 2010, according to the report.
These appreciations typically went to elderly homeowners, the analysis reveals – exacerbating the intergenerational wealth divide.
Age-Based Financial Divides
The typical financial disparity between people in their early 30s and people aged 60-64 grew by more than 100% in real terms, from £135k in pre-financial crisis, to 310 thousand pounds.
Regional Disparities
There were also stark regional variations, with the typical amount of assets in the pandemic period reaching £290k in south-east England, where real estate values have tended to rise rapidly, versus £110,000 in the north-east.
Health Crisis Years Effects
Amid the health crisis, when millions of workers were covered under the government-supported job retention program, and pandemic lockdowns curtailed consumption options, the statistics indicate countless homes were capable of accumulating, increasing their wealth.
Wealthier families achieved superior outcomes, though. "The median home in the poorest fifth saw their liquid savings rise by merely £80 during the COVID years (2019-20 to 2021-22), approximately equivalent to the 24 months before COVID. In contrast, the median home in the wealthiest fifth saw their liquid savings increase by £4,200," the analysis concludes.
