Per recent study, the average employee in the UK would need over five decades of salary to achieve the financial standing of the most affluent 10% in the country.
Expanding Economic Disparity Across Decades
The analysis examined net worth statistics including the Covid pandemic period and determined that during the pre-financial crisis era, it would have taken 38 years' worth of median full-time earnings to enter the richest segment of the financial hierarchy.
An economic expert part of the study observed: "Wealth gaps in Britain are presently so substantial that a average worker saving all their earnings during their working years would continue to be incapable to achieve the peak of the economic scale."
Measuring the Wealth Divide
The research discovered that the gap between the net worth of the average person and a person belonging to the top 10% was £1m in the mid-2000s, but had increased to £1.3 million in inflation-adjusted terms by 2020-22.
The researcher further stated: "These gaps are especially alarming as economic movement in Britain is limited – those who commence life wealthy tend to continue being rich, and the opposite holds true."
Comparative Financial Divide
Although the wealth gap widening in actual numbers, the share of complete net worth in the UK held by the wealthiest families – termed "relative wealth inequality" – has been "largely unchanged since the eighties," per the analysis.
Over this timeframe, overall assets in the UK surged from triple the annual GDP, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "unearned" gains, through increasing property values and variations in pension valuations, were the key contributors of the growing financial disparity over the past decade, as stated in the analysis.
These increases tended to accrue to elderly homeowners, the analysis reveals – exacerbating the generational financial disparity.
Generational Economic Gaps
The average wealth gap between people in their early 30s and sixty-somethings grew by more than 100% in real terms, from £135,000 in pre-financial crisis, to £310,000.
Area-Based Differences
Furthermore, the study revealed pronounced geographic differences, with the typical amount of wealth in 2020-22 standing at 290 thousand pounds in south-east England, where real estate values have generally grown substantially, compared with 110 thousand pounds in the northeastern region.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were protected by the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the data shows countless homes were able to save, increasing their wealth.
Wealthier families performed significantly better, however. "The typical family in the bottom income bracket saw their liquid savings grow by only eighty pounds during the COVID years (2019-20 to 2021-22), broadly the same as the pre-crisis period. Conversely, the typical family in the wealthiest fifth saw their cash reserves increase by £4,200," the study reveals.
