Based on new study, the typical earner in the UK would need 52 years' worth of income to attain the wealth level of the most affluent 10% in the country.
Widening Economic Disparity Over Time
The study analyzed financial assets statistics including the recent health crisis years and found that during the pre-financial crisis era, it would have required nearly four decades of average worker salary to reach the top 10th of the wealth distribution.
An economic expert associated with the report stated: "Wealth gaps in Britain are currently so significant that a typical full-time employee accumulating their complete salary during their working years would remain unable to reach the top of the financial hierarchy."
Quantifying the Financial Disparity
The analysis revealed that the disparity between the assets of the typical individual and a person belonging to the wealthiest decile was £1m in the pre-crisis period, but had expanded to £1.3 million in inflation-adjusted terms by the pandemic years.
The analyst continued: "These gaps are especially alarming as financial progression in Britain is low – individuals who begin life well-off tend to remain affluent, and vice versa."
Relative Wealth Inequality
Even with the economic divide expanding in specific figures, the portion of total wealth in the UK owned by the wealthiest families – termed "relative wealth inequality" – has been "mostly consistent since the 1980s," per the analysis.
Over this timeframe, complete net worth in the UK increased dramatically from thrice the annual GDP, to approximately 7.5x.
Contributors of Economic Disparity
So-called "automatic" appreciation, through rising house prices and adjustments to pension valuations, were the key contributors of the expanding economic divide since 2010, per the study.
These appreciations tended to accrue to senior citizens with real estate, the study demonstrates – intensifying the generational financial disparity.
Generational Wealth Disparities
The median economic difference between individuals aged 30-34 and sixty-somethings grew by more than 100% in real terms, from 135 thousand pounds in pre-financial crisis, to 310 thousand pounds.
Regional Variations
There were also significant regional variations, with the average level of wealth in 2020-22 standing at £290,000 in the southeastern region, where housing costs have tended to rise rapidly, versus 110 thousand pounds in the north-east.
Pandemic Period Effects
Amid the health crisis, when numerous employees were supported by the government-supported job retention program, and pandemic lockdowns curtailed consumption options, the statistics indicate many households were able to save, increasing their wealth.
Higher-income households fared much better, though. "The average household in the lowest-income quintile saw their available funds rise by merely £80 over the pandemic period (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. Conversely, the average household in the highest income quintile saw their liquid savings increase by £4,200," the report finds.
