According to new study, the typical employee in the UK would have to work half a century of earnings to achieve the financial standing of the wealthiest 10% nationwide.
Widening Financial Divide Through the Years
The study examined financial assets data from the recent health crisis years and determined that in the mid-2000s, it would have required 38 years of median full-time earnings to join the richest segment of the wealth distribution.
A senior economist involved with the analysis stated: "Wealth gaps in Britain are presently so substantial that a average worker saving all their earnings across their entire working life would still not be able to reach the top of the economic scale."
Measuring the Wealth Divide
The analysis found that the disparity between the assets of the average person and a person belonging to the wealthiest decile was £1 million in the pre-crisis period, but had increased to £1.3 million in inflation-adjusted terms by 2020-22.
The economist continued: "These differences are particularly worrying as financial progression in Britain is restricted – individuals who begin life affluent tend to stay wealthy, and vice versa."
Proportional Economic Disparity
Even with the financial disparity widening in absolute terms, the share of overall assets in the UK held by the richest households – termed "proportional economic disparity" – has been "largely unchanged since the eighties," according to the study.
Over this timeframe, total wealth in the UK surged from thrice the annual GDP, to nearly seven and a half times.
Factors of Wealth Inequality
Termed "unearned" increases, via growing real estate costs and variations in pension valuations, were the key contributors of the expanding economic divide from 2010 onward, according to the analysis.
These increases typically went to senior citizens with real estate, the study demonstrates – exacerbating the intergenerational wealth divide.
Generational Financial Divides
The typical financial disparity between thirty-somethings and sixty-somethings grew by more than 100% in actual value, from £135k in 2006-08, to £310,000.
Area-Based Disparities
There were also pronounced area-based disparities, with the average level of wealth in 2020-22 standing at 290 thousand pounds in south-east England, where housing costs have generally grown substantially, compared with £110k in the NE of England.
Health Crisis Years Effects
During the pandemic, when millions of workers were protected by the government-supported job retention program, and health crisis restrictions reduced expenditure possibilities, the information reveals many households were able to save, increasing their wealth.
Higher-income households fared much better, however. "The typical family in the lowest-income quintile saw their cash reserves rise by merely £80 during the COVID years (2019-20 to 2021-22), roughly identical to the pre-crisis period. Conversely, the median home in the top income bracket saw their liquid savings grow by 4,200 pounds," the study reveals.