It would take the average earner in the UK 52 years’ worth of earnings to become as wealthy as the richest 10%, according to new research by the Resolution Foundation.
In a new report, the influential thinktank analyses the Office for National Statistics’ latest wealth and assets survey, which covers the Covid pandemic period of 2020-22.
The authors find that in 2006-08, before the global financial crisis, it would have taken 38 years’ worth of median full-time earnings to lift a worker into the top 10th of the wealth distribution. By 2020-22 that gap had widened, so that it would take 52 years of earnings.
Molly Broome, senior economist at the Resolution Foundation and the lead author of the report, said: “Wealth gaps in Britain are now so large that a typical full-time employee saving all their earnings across their entire working life would still not be able to reach the top of the wealth ladder.”
The gap between the wealth of the average person and someone in the top 10% was £1m in 2006-08, but had widened to £1.3m in real terms by 2020-22, the foundation finds.
Broome added: “These gaps are doubly concerning as wealth mobility in Britain is low – people that start life wealthy tend to stay wealthy, and vice versa.”
Despite the wealth gap widening in absolute terms, however, the share of total wealth in the UK held by the richest households – known as “relative wealth inequality” – has been “broadly stable since the 1980s”, the thinktank points out. Over that time, total wealth in the UK surged from three times the annual GDP, to almost 7.5 times.
So-called “passive” gains, through rising house prices and changes in pension valuations, were the main drivers of the widening wealth gap since 2010, according to the report.
These tended to accrue to older, property-owning households, the research shows – worsening the intergenerational wealth divide.
The average wealth gap between people in their early 30s and early 60s more than doubled in real terms, from £135,000 in 2006-08, to £310,000.
There were also stark regional variations, with the average level of wealth in 2020-22 standing at £290,000 in south-east England, where property prices have tended to rise rapidly, compared with £110,000 in the north-east.
During the pandemic, when millions of workers were protected by the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the data shows many households were able to save, increasing their wealth.
Higher-income households fared much better, however. “The typical family in the lowest-income quintile saw their liquid savings increase by just £80 over the pandemic period (2019-20 to 2021-22), broadly the same as the two years pre-pandemic. In contrast, the typical family in the highest income quintile saw their liquid savings increase by £4,200”, the report finds.
