According to new study, the median earner in the UK would require over five decades of income to achieve the financial standing of the most affluent 10% in the country.
Growing Economic Disparity Through the Years
This research examined net worth data including the Covid pandemic period and discovered that in the mid-2000s, it would have required 38 years of average worker salary to enter the richest segment of the economic ladder.
A senior economist associated with the study commented: "Financial divides in Britain are currently so significant that a regular employee accumulating their complete salary throughout their career would remain unable to achieve the peak of the financial hierarchy."
Measuring the Economic Gap
The analysis revealed that the disparity between the net worth of the average person and an individual in the richest segment was £1m in 2006-08, but had expanded to £1.3m in actual value by recent times.
The analyst further stated: "These gaps are doubly concerning as economic movement in Britain is low – people that start life affluent tend to continue being rich, and vice versa."
Proportional Economic Disparity
Although the economic divide widening in specific figures, the portion of total wealth in the UK possessed by the richest households – termed "relative wealth inequality" – has been "largely unchanged since the 1980s," as stated in the analysis.
During this period, total wealth in the UK surged from thrice the yearly economic output, to almost 7.5 times.
Contributors of Wealth Inequality
So-called "automatic" appreciation, via increasing property values and changes in pension valuations, were the key contributors of the growing financial disparity over the past decade, as stated in the analysis.
These gains generally flowed to older, property-owning households, the analysis reveals – exacerbating the age-based economic gap.
Intergenerational Financial Divides
The average wealth gap between thirty-somethings and those in their early 60s grew by more than 100% in inflation-adjusted terms, from £135k in pre-financial crisis, to £310k.
Regional Disparities
Furthermore, the study revealed pronounced area-based disparities, with the median value of wealth in recent years standing at 290 thousand pounds in the southeastern region, where housing costs have tended to rise rapidly, versus 110 thousand pounds in the NE of England.
COVID Era Impact
Amid the health crisis, when millions of workers were covered under the government-supported job retention program, and health crisis restrictions curtailed consumption options, the data shows many households were in a position to set aside money, enhancing their financial standing.
Wealthier families fared much better, though. "The average household in the bottom income bracket saw their available funds increase by just £80 throughout the health crisis (2019-20 to 2021-22), broadly the same as the 24 months before COVID. Conversely, the average household in the highest income quintile saw their available funds rise by £4,200," the study reveals.
