Based on new research, the median employee in the UK would need 52 years' worth of income to attain the net worth of the richest 10% of the population.
Expanding Financial Divide Through the Years
This research reviewed wealth distribution information including the 2020-22 timeframe and determined that back in the mid-2000s, it would have taken 38 years of typical employment income to reach the top 10th of the wealth distribution.
A research lead part of the report commented: "Economic disparities in Britain are currently so significant that a regular employee accumulating their complete salary across their entire working life would still not be able to attain the highest level of the economic scale."
Assessing the Financial Disparity
The analysis found that the difference between the wealth of the typical individual and an individual in the top 10% was one million pounds in the mid-2000s, but had expanded to 1.3 million pounds in actual value by recent times.
The analyst continued: "These gaps are particularly worrying as economic movement in Britain is limited – individuals who begin life well-off tend to continue being rich, and conversely applies."
Relative Wealth Inequality
Despite the financial disparity expanding in actual numbers, the share of complete net worth in the UK owned by the wealthiest families – called "proportional economic disparity" – has been "broadly stable since the 1980s," according to the study.
Over this timeframe, total wealth in the UK rose substantially from triple the yearly economic output, to nearly seven and a half times.
Drivers of Wealth Inequality
So-called "automatic" increases, through rising house prices and changes in superannuation evaluations, were the key contributors of the expanding economic divide since 2010, as stated in the analysis.
These increases typically went to older, property-owning households, the analysis reveals – worsening the intergenerational wealth divide.
Age-Based Wealth Disparities
The average wealth gap between people in their early 30s and those in their early 60s grew by more than 100% in actual value, from 135 thousand pounds in the mid-2000s, to £310k.
Geographic Variations
Furthermore, the study revealed stark area-based disparities, with the typical amount of net worth in recent years standing at £290k in the southeastern region, where real estate values have typically increased quickly, versus £110,000 in the NE of England.
Pandemic Period Impact
Amid the health crisis, when numerous employees were supported by the taxpayer-backed furlough scheme, and Covid shutdowns reduced expenditure possibilities, the statistics indicate countless homes were able to save, increasing their wealth.
Wealthier families performed significantly better, however. "The average household in the lowest-income quintile saw their cash reserves increase by just £80 over the pandemic period (across the pandemic timeframe), approximately equivalent to the two years pre-pandemic. On the other hand, the average household in the wealthiest fifth saw their cash reserves rise by £4,200," the report finds.
