Based on new analysis, the median earner in the UK would need over five decades of earnings to reach the financial standing of the richest 10% of the population.
Growing Financial Divide Through the Years
The study reviewed financial assets data covering the 2020-22 timeframe and found that during 2006-08, it would have required 38 years of median full-time earnings to enter the wealthiest decile of the wealth distribution.
A senior economist involved with the report observed: "Wealth gaps in Britain are now so large that a average worker saving all their earnings across their entire working life would continue to be incapable to attain the highest level of the wealth ladder."
Quantifying the Wealth Divide
The research found that the gap between the assets of the median citizen and a person belonging to the richest segment was £1m in 2006-08, but had expanded to 1.3 million pounds in inflation-adjusted terms by recent times.
The analyst continued: "These gaps are particularly worrying as wealth mobility in Britain is low – people that start life wealthy tend to remain affluent, and vice versa."
Comparative Financial Divide
Despite the economic divide growing in absolute terms, the portion of complete net worth in the UK owned by the richest households – called "proportional economic disparity" – has been "largely unchanged since the 1980s," per the research.
Over this timeframe, total wealth in the UK rose substantially from thrice the annual GDP, to approximately 7.5x.
Contributors of Economic Disparity
Termed "unearned" appreciation, through rising house prices and variations in superannuation evaluations, were the key contributors of the expanding economic divide from 2010 onward, as stated in the study.
These increases typically went to senior citizens with real estate, the analysis reveals – worsening the generational financial disparity.
Age-Based Financial Divides
The typical financial disparity between people in their early 30s and sixty-somethings more than doubled in actual value, from £135k in the mid-2000s, to £310,000.
Geographic Differences
Additionally, there were stark regional variations, with the median value of wealth in recent years standing at £290k in the southeastern region, where real estate values have generally grown substantially, compared with 110 thousand pounds in the north-east.
Health Crisis Years Consequences
Throughout the COVID period, when numerous employees were supported by the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the data shows many households were able to save, growing their net worth.
Higher-income households fared much better, however. "The typical family in the poorest fifth saw their available funds grow by only eighty pounds throughout the health crisis (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. In contrast, the median home in the top income bracket saw their available funds increase by £4,200," the analysis concludes.
