According to recent research, the typical earner in the UK would have to work over five decades of earnings to attain the net worth of the most affluent 10% in the country.
Expanding Wealth Gap Through the Years
This research analyzed wealth distribution information from the recent health crisis years and discovered that back in the mid-2000s, it would have taken 38 years' worth of typical employment income to reach the wealthiest decile of the financial hierarchy.
An economic expert part of the report observed: "Financial divides in Britain are now so large that a typical full-time employee saving all their earnings during their working years would remain unable to attain the highest level of the financial hierarchy."
Quantifying the Financial Disparity
The research revealed that the difference between the wealth of the typical individual and a person belonging to the richest segment was £1 million in 2006-08, but had expanded to 1.3 million pounds in inflation-adjusted terms by recent times.
The economist continued: "These gaps are especially alarming as financial progression in Britain is restricted – individuals who begin life well-off tend to continue being rich, and vice versa."
Proportional Economic Disparity
Despite the wealth gap growing in absolute terms, the portion of complete net worth in the UK held by the richest households – known as "comparative financial divide" – has been "broadly stable since the eighties," as stated in the study.
Over this timeframe, total wealth in the UK rose substantially from triple the yearly economic output, to nearly seven and a half times.
Drivers of Financial Divide
Termed "automatic" increases, through rising house prices and changes in superannuation evaluations, were the main drivers of the expanding economic divide since 2010, as stated in the report.
These gains generally flowed to older, property-owning households, the research shows – exacerbating the generational financial disparity.
Intergenerational Financial Divides
The typical financial disparity between thirty-somethings and those in their early 60s grew by more than 100% in real terms, from 135 thousand pounds in 2006-08, to £310,000.
Regional Variations
There were also significant geographic differences, with the median value of wealth in the pandemic period reaching £290k in the SE of England, where housing costs have typically increased quickly, compared with £110k in the northeastern region.
Pandemic Period Effects
During the pandemic, when millions of workers were supported by the taxpayer-backed furlough scheme, and health crisis restrictions limited opportunities for spending, the data shows numerous families were able to save, growing their net worth.
Wealthier families fared much better, however. "The typical family in the bottom income bracket saw their liquid savings rise by merely £80 over the pandemic period (from 2019 to 2022), broadly the same as the 24 months before COVID. On the other hand, the typical family in the wealthiest fifth saw their cash reserves increase by £4,200," the analysis concludes.
