Per recent analysis, the typical employee in the UK would have to work over five decades of salary to attain the net worth of the most affluent 10% in the country.
Growing Economic Disparity Over Time
The study reviewed wealth distribution data from the recent health crisis years and found that in 2006-08, it would have required 38 years' worth of typical employment income to enter the richest segment of the economic ladder.
A senior economist associated with the report stated: "Financial divides in Britain are currently so significant that a average worker setting aside their entire income across their entire working life would still not be able to reach the top of the economic scale."
Measuring the Economic Gap
The study revealed that the difference between the net worth of the median citizen and an individual in the top 10% was £1m in 2006-08, but had widened to £1.3m in inflation-adjusted terms by recent times.
The analyst added: "These differences are doubly concerning as financial progression in Britain is low – those who commence life affluent tend to stay wealthy, and conversely applies."
Comparative Financial Divide
Even with the financial disparity expanding in absolute terms, the share of total wealth in the UK owned by the richest households – termed "comparative financial divide" – has been "mostly consistent since the eighties," according to the analysis.
Over this timeframe, total wealth in the UK surged from three times the annual GDP, to approximately 7.5x.
Factors of Wealth Inequality
Termed "passive" appreciation, by means of increasing property values and variations in superannuation evaluations, were the key contributors of the widening wealth gap over the past decade, according to the report.
These appreciations generally flowed to senior citizens with real estate, the study demonstrates – exacerbating the intergenerational wealth divide.
Intergenerational Financial Divides
The typical financial disparity between thirty-somethings and sixty-somethings grew by more than 100% in actual value, from £135,000 in 2006-08, to £310,000.
Geographic Disparities
Additionally, there were significant geographic differences, with the typical amount of wealth in 2020-22 amounting to £290,000 in south-east England, where real estate values have generally grown substantially, compared with 110 thousand pounds in the north-east.
Health Crisis Years Impact
Amid the health crisis, when millions of workers were protected by the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the data shows many households were in a position to set aside money, increasing their wealth.
More affluent homes fared much better, nevertheless. "The typical family in the lowest-income quintile saw their cash reserves increase by just £80 during the COVID years (2019-20 to 2021-22), broadly the same as the 24 months before COVID. On the other hand, the typical family in the highest income quintile saw their cash reserves grow by 4,200 pounds," the report finds.
