According to fresh study, the median earner in the UK would need over five decades of salary to attain the wealth level of the richest 10% of the population.
Growing Financial Divide Through the Years
The study examined net worth statistics from the Covid pandemic period and determined that during the mid-2000s, it would have needed nearly four decades of typical employment income to reach the richest segment of the economic ladder.
A senior economist involved with the analysis observed: "Economic disparities in Britain are now so large that a regular employee accumulating their complete salary throughout their career would continue to be incapable to achieve the peak of the financial hierarchy."
Quantifying the Economic Gap
The analysis discovered that the gap between the net worth of the median citizen and someone in the richest segment was £1m in the pre-crisis period, but had widened to 1.3 million pounds in actual value by recent times.
The researcher continued: "These gaps are doubly concerning as economic movement in Britain is low – people that start life wealthy tend to continue being rich, and conversely applies."
Relative Wealth Inequality
Despite the wealth gap expanding in specific figures, the percentage of overall assets in the UK held by the most affluent homes – called "relative wealth inequality" – has been "largely unchanged since the 1980s," according to the analysis.
Over this timeframe, overall assets in the UK rose substantially from triple the annual GDP, to almost 7.5 times.
Contributors of Wealth Inequality
So-called "unearned" increases, via increasing property values and changes in pension valuations, were the primary factors of the growing financial disparity over the past decade, as stated in the analysis.
These gains generally flowed to older, property-owning households, the study demonstrates – intensifying the age-based economic gap.
Intergenerational Economic Gaps
The median economic difference between individuals aged 30-34 and sixty-somethings grew by more than 100% in actual value, from £135,000 in the mid-2000s, to 310 thousand pounds.
Regional Disparities
There were also stark area-based disparities, with the median value of net worth in the pandemic period amounting to 290 thousand pounds in the SE of England, where housing costs have generally grown substantially, as opposed to £110,000 in the NE of England.
Health Crisis Years Consequences
During the pandemic, when millions of workers were protected by the taxpayer-backed furlough scheme, and health crisis restrictions reduced expenditure possibilities, the data shows many households were in a position to set aside money, increasing their wealth.
Wealthier families fared much better, though. "The average household in the bottom income bracket saw their cash reserves rise by merely £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. Conversely, the median home in the highest income quintile saw their liquid savings grow by 4,200 pounds," the study reveals.
