According to new study, the typical worker in the UK would need 52 years' worth of salary to attain the financial standing of the most affluent 10% in the country.
Widening Wealth Gap Over Time
The analysis reviewed wealth distribution information covering the 2020-22 timeframe and found that in the pre-financial crisis era, it would have taken nearly four decades of typical employment income to join the richest segment of the financial hierarchy.
A senior economist involved with the study stated: "Wealth gaps in Britain are currently so significant that a regular employee saving all their earnings during their working years would continue to be incapable to reach the top of the financial hierarchy."
Measuring the Financial Disparity
The analysis revealed that the gap between the wealth of the average person and a person belonging to the wealthiest decile was £1m in the pre-crisis period, but had expanded to £1.3m in actual value by the pandemic years.
The economist further stated: "These differences are particularly worrying as wealth mobility in Britain is restricted – individuals who begin life affluent tend to stay wealthy, and vice versa."
Relative Wealth Inequality
Although the financial disparity widening in specific figures, the share of overall assets in the UK possessed by the wealthiest families – known as "proportional economic disparity" – has been "mostly consistent since the 1980s," per the analysis.
Over this timeframe, overall assets in the UK rose substantially from thrice the annual GDP, to approximately 7.5x.
Contributors of Economic Disparity
So-called "unearned" gains, via growing real estate costs and adjustments to pension valuations, were the primary factors of the widening wealth gap over the past decade, per the report.
These gains typically went to senior citizens with real estate, the research shows – exacerbating the age-based economic gap.
Age-Based Economic Gaps
The typical financial disparity between individuals aged 30-34 and those in their early 60s increased over twofold in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310,000.
Area-Based Disparities
Furthermore, the study revealed stark regional variations, with the typical amount of wealth in recent years reaching £290,000 in the southeastern region, where housing costs have generally grown substantially, as opposed to 110 thousand pounds in the northeastern region.
COVID Era Consequences
Amid the health crisis, when millions of workers were protected by the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the information reveals countless homes were capable of accumulating, increasing their wealth.
Higher-income households performed significantly better, however. "The average household in the lowest-income quintile saw their cash reserves rise by merely £80 throughout the health crisis (from 2019 to 2022), roughly identical to the pre-crisis period. On the other hand, the average household in the highest income quintile saw their liquid savings increase by £4,200," the study reveals.
