Per new study, the typical employee in the UK would need over five decades of salary to achieve the wealth level of the richest 10% nationwide.
Expanding Financial Divide Across Decades
The study analyzed wealth distribution data covering the 2020-22 timeframe and found that during the pre-financial crisis era, it would have taken 38 years of typical employment income to join the wealthiest decile of the financial hierarchy.
An economic expert part of the analysis stated: "Wealth gaps in Britain are currently so significant that a average worker accumulating their complete salary during their working years would still not be able to achieve the peak of the economic scale."
Assessing the Financial Disparity
The research found that the disparity between the assets of the median citizen and an individual in the wealthiest decile was £1m in the pre-crisis period, but had increased to £1.3m in inflation-adjusted terms by the pandemic years.
The economist added: "These disparities are doubly concerning as wealth mobility in Britain is limited – individuals who begin life well-off tend to continue being rich, and vice versa."
Relative Wealth Inequality
Even with the economic divide growing in actual numbers, the portion of total wealth in the UK held by the wealthiest families – termed "relative wealth inequality" – has been "largely unchanged since the eighties," as stated in the research.
Throughout these years, total wealth in the UK increased dramatically from thrice the annual GDP, to approximately 7.5x.
Drivers of Economic Disparity
Referred to as "unearned" appreciation, via increasing property values and adjustments to pension valuations, were the key contributors of the growing financial disparity from 2010 onward, as stated in the report.
These increases typically went to senior citizens with real estate, the analysis reveals – intensifying the age-based economic gap.
Generational Financial Divides
The average wealth gap between individuals aged 30-34 and sixty-somethings grew by more than 100% in real terms, from 135 thousand pounds in 2006-08, to 310 thousand pounds.
Geographic Disparities
Additionally, there were significant geographic differences, with the typical amount of net worth in 2020-22 reaching 290 thousand pounds in the southeastern region, where real estate values have generally grown substantially, as opposed to £110,000 in the northeastern region.
Pandemic Period Effects
During the pandemic, when numerous employees were protected by the public-funded employment protection, and Covid shutdowns limited opportunities for spending, the data shows numerous families were capable of accumulating, increasing their wealth.
Higher-income households performed significantly better, however. "The typical family in the lowest-income quintile saw their available funds increase by just £80 during the COVID years (2019-20 to 2021-22), roughly identical to the two years pre-pandemic. On the other hand, the average household in the wealthiest fifth saw their available funds rise by £4,200," the study reveals.
