Per fresh research, the average employee in the UK would need over five decades of earnings to reach the net worth of the most affluent 10% of the population.
Expanding Wealth Gap Over Time
This research analyzed financial assets statistics including the recent health crisis years and found that in 2006-08, it would have taken 38 years of median full-time earnings to reach the richest segment of the wealth distribution.
A senior economist part of the analysis stated: "Financial divides in Britain are now so large that a average worker accumulating their complete salary during their working years would still not be able to reach the top of the economic scale."
Assessing the Wealth Divide
The analysis found that the difference between the wealth of the average person and a person belonging to the richest segment was £1m in the mid-2000s, but had expanded to 1.3 million pounds in actual value by the pandemic years.
The researcher further stated: "These gaps are doubly concerning as financial progression in Britain is restricted – those who commence life affluent tend to remain affluent, and vice versa."
Proportional Economic Disparity
Even with the financial disparity expanding in actual numbers, the percentage of total wealth in the UK possessed by the richest households – termed "relative wealth inequality" – has been "mostly consistent since the 1980s," according to the research.
Over this timeframe, total wealth in the UK increased dramatically from triple the gross domestic product, to approximately 7.5x.
Drivers of Financial Divide
Termed "unearned" gains, through rising house prices and changes in superannuation evaluations, were the primary factors of the expanding economic divide from 2010 onward, according to the report.
These appreciations generally flowed to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Intergenerational Wealth Disparities
The typical financial disparity between thirty-somethings and people aged 60-64 more than doubled in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to £310k.
Area-Based Variations
There were also stark geographic differences, with the average level of assets in the pandemic period amounting to £290k in the SE of England, where property prices have generally grown substantially, as opposed to £110k in the north-east.
Health Crisis Years Effects
Throughout the COVID period, when millions of workers were protected by the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the data shows numerous families were able to save, increasing their wealth.
Wealthier families fared much better, however. "The average household in the lowest-income quintile saw their available funds grow by only eighty pounds during the COVID years (2019-20 to 2021-22), broadly the same as the two years pre-pandemic. Conversely, the average household in the wealthiest fifth saw their liquid savings increase by £4,200," the report finds.
