Per new research, the average employee in the UK would need over five decades of income to reach the net worth of the wealthiest 10% of the population.
Expanding Financial Divide Over Time
The study analyzed net worth information including the 2020-22 timeframe and found that during the pre-financial crisis era, it would have taken 38 years' worth of median full-time earnings to reach the wealthiest decile of the financial hierarchy.
A senior economist part of the report stated: "Economic disparities in Britain are presently so substantial that a regular employee saving all their earnings during their working years would remain unable to reach the top of the financial hierarchy."
Measuring the Economic Gap
The research found that the difference between the wealth of the average person and someone in the wealthiest decile was one million pounds in 2006-08, but had widened to 1.3 million pounds in actual value by 2020-22.
The researcher added: "These disparities are doubly concerning as financial progression in Britain is low – people that start life affluent tend to continue being rich, and the opposite holds true."
Comparative Financial Divide
Even with the financial disparity widening in specific figures, the percentage of overall assets in the UK owned by the most affluent homes – known as "proportional economic disparity" – has been "largely unchanged since the 1980s," as stated in the research.
During this period, overall assets in the UK rose substantially from triple the annual GDP, to nearly seven and a half times.
Contributors of Wealth Inequality
Referred to as "passive" gains, via growing real estate costs and adjustments to pension valuations, were the main drivers of the expanding economic divide over the past decade, according to the analysis.
These increases typically went to older, property-owning households, the study demonstrates – worsening the generational financial disparity.
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 real terms, from £135,000 in 2006-08, to 310 thousand pounds.
Regional Variations
Additionally, there were stark regional variations, with the average level of assets in recent years reaching £290k in the southeastern region, where housing costs have typically increased quickly, versus 110 thousand pounds in the north-east.
COVID Era Consequences
Amid the health crisis, when millions of workers were supported by the government-supported job retention program, and pandemic lockdowns curtailed consumption options, the data shows countless homes were able to save, enhancing their financial standing.
Wealthier families achieved superior outcomes, however. "The average household in the bottom income bracket saw their liquid savings rise by merely £80 during the COVID years (across the pandemic timeframe), broadly the same as the 24 months before COVID. On the other hand, the average household in the wealthiest fifth saw their available funds rise by £4,200," the report finds.
