According to recent research, the median employee in the UK would require over five decades of salary to attain the financial standing of the most affluent 10% in the country.
Growing Economic Disparity Through the Years
The study reviewed financial assets data covering the recent health crisis years and determined that back in the mid-2000s, it would have needed nearly four decades of average worker salary to enter the top 10th of the economic ladder.
A research lead part of the study commented: "Financial divides in Britain are currently so significant that a average worker saving all their earnings throughout their career would remain unable to reach the top of the economic scale."
Assessing the Wealth Divide
The analysis revealed that the disparity between the wealth of the median citizen and an individual in the wealthiest decile was £1m in the pre-crisis period, but had widened to £1.3m in inflation-adjusted terms by recent times.
The economist continued: "These disparities are especially alarming as economic movement in Britain is low – people that start life affluent tend to remain affluent, and conversely applies."
Relative Wealth Inequality
Even with the financial disparity widening in actual numbers, the percentage of overall assets in the UK possessed by the wealthiest families – termed "proportional economic disparity" – has been "largely unchanged since the eighties," according to the research.
Over this timeframe, complete net worth in the UK rose substantially from thrice the gross domestic product, to nearly seven and a half times.
Factors of Wealth Inequality
Termed "unearned" gains, by means of rising house prices and variations in retirement fund assessments, were the main drivers of the growing financial disparity over the past decade, per the report.
These appreciations typically went to older, property-owning households, the study demonstrates – exacerbating the generational financial disparity.
Age-Based Economic Gaps
The typical financial disparity between individuals aged 30-34 and sixty-somethings grew by more than 100% in inflation-adjusted terms, from £135k in 2006-08, to £310k.
Regional Variations
Furthermore, the study revealed pronounced geographic differences, with the median value of net worth in recent years reaching £290k in the SE of England, where housing costs have generally grown substantially, versus £110k in the NE of England.
Pandemic Period Consequences
Amid the health crisis, when millions of workers were supported by the public-funded employment protection, and Covid shutdowns reduced expenditure possibilities, the data shows many households were in a position to set aside money, enhancing their financial standing.
Wealthier families fared much better, however. "The typical family in the poorest fifth saw their cash reserves grow by only eighty pounds throughout the health crisis (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. Conversely, the median home in the wealthiest fifth saw their available funds grow by 4,200 pounds," the report finds.
