According to recent analysis, the average employee in the UK would require half a century of income to achieve the wealth level of the richest 10% in the country.
Growing Financial Divide Over Time
This research reviewed wealth distribution statistics including the 2020-22 timeframe and determined that back in 2006-08, it would have taken nearly four decades of median full-time earnings to enter the richest segment of the economic ladder.
A research lead associated with the report commented: "Economic disparities in Britain are currently so significant that a regular employee setting aside their entire income throughout their career would still not be able to achieve the peak of the financial hierarchy."
Assessing the Economic Gap
The analysis found that the disparity between the net worth of the typical individual and an individual in the richest segment was one million pounds in the mid-2000s, but had widened to £1.3 million in inflation-adjusted terms by the pandemic years.
The economist added: "These gaps are particularly worrying as wealth mobility in Britain is limited – individuals who begin life affluent tend to stay wealthy, and the opposite holds true."
Comparative Financial Divide
Despite the economic divide widening in actual numbers, the share of total wealth in the UK held by the most affluent homes – known as "comparative financial divide" – has been "largely unchanged since the 1980s era," per the research.
During this period, complete net worth in the UK increased dramatically from triple the gross domestic product, to nearly seven and a half times.
Factors of Financial Divide
Termed "unearned" appreciation, by means of growing real estate costs and changes in superannuation evaluations, were the main drivers of the expanding economic divide since 2010, as stated in the report.
These gains typically went to older, property-owning households, the analysis reveals – intensifying the age-based economic gap.
Intergenerational Economic Gaps
The average wealth gap between people in their early 30s and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135k in the mid-2000s, to £310k.
Geographic Differences
Additionally, there were pronounced geographic differences, with the average level of assets in recent years amounting to £290,000 in the SE of England, where housing costs have generally grown substantially, versus 110 thousand pounds in the northeastern region.
Pandemic Period Impact
During the pandemic, when millions of workers were covered under the public-funded employment protection, and health crisis restrictions limited opportunities for spending, the data shows many households were able to save, increasing their wealth.
More affluent homes fared much better, nevertheless. "The average household in the bottom income bracket saw their cash reserves rise by merely £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the pre-crisis period. In contrast, the average household in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the study reveals.
