A new report by the Resolution Foundation shows that the UK’s wealth inequality is continuing to grow and that a lifetime of earnings is no longer enough for UK workers to join the wealthiest 10% in the country.
The think tank drew on data from the Wealth and Assets Survey (WAS), covering April 2020 to March 2022, to provide a comprehensive analysis of the effects of the pandemic on household balance sheets.
It also used the new data to explore the extent to which people move up and down the wealth distribution, shedding new light on the persistence of wealth inequality.
The top line finding is that Britain’s stock of household wealth continued to grow during the pandemic, reaching nearly 7.5 times GDP, up from around three times GDP in the mid-1980s.
As total wealth has grown, so have gaps between the wealthy and the less wealthy. The absolute real wealth gap between average family wealth per adult in the top wealth decile and those in the middle (fifth decile) reached £1.3 million in 2020-22, up from £1 million in 2006-08.
Larger wealth gaps make it harder for those lower down to climb the wealth ladder: in 2006-08, the gap in average wealth per adult between the top and middle decile was equivalent to around 38 times typical full-time earnings. By 2020-22, this had risen to 52 times.
The growing wealth gap
To put these wealth gaps into perspective, in 2020-22 the average (mean) per-adult net family wealth was around £168,000. The average person in the middle (fifth decile) had around £129,000, while those in the top decile held more than 11 times that amount (£1.5 million).
At the other end of the spectrum, people in the bottom decile had just £1,000 on average.
Larger wealth gaps between families at different points in the distribution have made it increasingly difficult for those lower down to climb the wealth ladder through saving alone.
In 2006-08, the gap in average wealth per adult between the top and middle deciles was equivalent to around 38 times typical full-time earnings.
By 2020-22, this had risen to 52 times.Even if a typical person in the fifth wealth decile miraculously saved all of their earnings throughout their entire working life, it would no longer be enough to move them up to the top of Britain’s wealth ladder.
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