🔗 Share this article

According to fresh study, the median earner in the UK would require half a century of salary to reach the financial standing of the richest 10% nationwide.

Expanding Financial Divide Over Time

The study examined net worth information covering the Covid pandemic period and determined that during 2006-08, it would have needed 38 years' worth of typical employment income to reach the wealthiest decile of the financial hierarchy.

An economic expert involved with the study observed: "Wealth gaps in Britain are currently so significant that a typical full-time employee saving all their earnings across their entire working life would remain unable to reach the top of the economic scale."

Measuring the Wealth Divide

The research revealed that the difference between the net worth of the typical individual and a person belonging to the wealthiest decile was £1 million in 2006-08, but had expanded to 1.3 million pounds in real terms by the pandemic years.

The analyst continued: "These differences are especially alarming as wealth mobility in Britain is restricted – people that start life well-off tend to stay wealthy, and vice versa."

Comparative Financial Divide

Even with the wealth gap widening in absolute terms, the percentage of complete net worth in the UK possessed by the wealthiest families – known as "comparative financial divide" – has been "largely unchanged since the eighties," per the analysis.

Over this timeframe, total wealth in the UK rose substantially from triple the annual GDP, to nearly seven and a half times.

Drivers of Economic Disparity

So-called "unearned" increases, via rising house prices and changes in superannuation evaluations, were the key contributors of the widening wealth gap over the past decade, per the study.

These appreciations generally flowed to senior citizens with real estate, the study demonstrates – exacerbating the intergenerational wealth divide.

Age-Based Wealth Disparities

The median economic difference between individuals aged 30-34 and people aged 60-64 more than doubled in inflation-adjusted terms, from £135k in the mid-2000s, to £310k.

Regional Variations

There were also stark area-based disparities, with the typical amount of net worth in recent years amounting to £290,000 in the southeastern region, where housing costs have tended to rise rapidly, versus £110k in the northeastern region.

Pandemic Period Effects

Throughout the COVID period, when numerous employees were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the data shows numerous families were able to save, increasing their wealth.

Wealthier families achieved superior outcomes, nevertheless. "The typical family in the poorest fifth saw their available funds rise by merely £80 over the pandemic period (from 2019 to 2022), roughly identical to the 24 months before COVID. Conversely, the typical family in the highest income quintile saw their available funds grow by 4,200 pounds," the study reveals.