According to recent research, the median earner in the UK would require half a century of income to achieve the wealth level of the wealthiest 10% of the population.
Expanding Wealth Gap Across Decades
The study reviewed wealth distribution data including the 2020-22 timeframe and discovered that in the mid-2000s, it would have needed 38 years of average worker salary to reach the richest segment of the economic ladder.
A senior economist part of the analysis observed: "Wealth gaps in Britain are now so large that a typical full-time employee accumulating their complete salary across their entire working life would continue to be incapable to achieve the peak of the wealth ladder."
Measuring the Wealth Divide
The analysis revealed that the difference between the wealth of the average person and someone in the top 10% was one million pounds in the mid-2000s, but had widened to £1.3 million in inflation-adjusted terms by the pandemic years.
The economist added: "These gaps are doubly concerning as economic movement in Britain is limited – those who commence life affluent tend to stay wealthy, and conversely applies."
Proportional Economic Disparity
Although the economic divide growing in absolute terms, the percentage of total wealth in the UK possessed by the most affluent homes – known as "comparative financial divide" – has been "broadly stable since the eighties," per the analysis.
During this period, overall assets in the UK increased dramatically from thrice the annual GDP, to approximately 7.5x.
Drivers of Financial Divide
So-called "passive" appreciation, by means of growing real estate costs and variations in superannuation evaluations, were the main drivers of the widening wealth gap over the past decade, according to the analysis.
These appreciations tended to accrue to older, property-owning households, the analysis reveals – worsening the generational financial disparity.
Intergenerational Financial Divides
The average wealth gap between thirty-somethings and sixty-somethings grew by more than 100% in real terms, from £135,000 in the mid-2000s, to 310 thousand pounds.
Regional Differences
Furthermore, the study revealed pronounced geographic differences, with the average level of wealth in the pandemic period amounting to £290,000 in south-east England, where housing costs have typically increased quickly, versus £110,000 in the northeastern region.
Health Crisis Years Consequences
During the pandemic, when millions of workers were covered under the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the information reveals numerous families were able to save, growing their net worth.
Higher-income households fared much better, however. "The typical family in the lowest-income quintile saw their available funds increase by just £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. On the other hand, the typical family in the highest income quintile saw their cash reserves grow by 4,200 pounds," the study reveals.