According to recent research, the average employee in the UK would need over five decades of income to reach the financial standing of the wealthiest 10% nationwide.
Widening Financial Divide Through the Years
The analysis reviewed financial assets information including the 2020-22 timeframe and found that back in the pre-financial crisis era, it would have needed 38 years' worth of typical employment income to join the top 10th of the wealth distribution.
An economic expert associated with the report observed: "Wealth gaps in Britain are now so large that a typical full-time employee accumulating their complete salary across their entire working life would remain unable to attain the highest level of the economic scale."
Measuring the Wealth Divide
The research found that the gap between the assets of the average person and someone in the wealthiest decile was £1m in 2006-08, but had increased to 1.3 million pounds in real terms by recent times.
The economist further stated: "These differences are especially alarming as financial progression in Britain is restricted – those who commence life wealthy tend to continue being rich, and vice versa."
Comparative Financial Divide
Although the financial disparity widening in absolute terms, the percentage of overall assets in the UK possessed by the richest households – known as "relative wealth inequality" – has been "mostly consistent since the 1980s," as stated in the research.
Over this timeframe, total wealth in the UK increased dramatically from thrice the annual GDP, to nearly seven and a half times.
Factors of Economic Disparity
So-called "passive" appreciation, through growing real estate costs and variations in pension valuations, were the main drivers of the widening wealth gap from 2010 onward, as stated in the study.
These gains generally flowed to older, property-owning households, the study demonstrates – intensifying the generational financial disparity.
Intergenerational Financial Divides
The typical financial disparity between thirty-somethings and sixty-somethings grew by more than 100% in real terms, from £135k in pre-financial crisis, to 310 thousand pounds.
Geographic Variations
Additionally, there were significant geographic differences, with the average level of assets in the pandemic period reaching £290k in south-east England, where property prices have generally grown substantially, as opposed to £110k in the northeastern region.
Health Crisis Years Consequences
Amid the health crisis, when millions of workers were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the statistics indicate many households were in a position to set aside money, increasing their wealth.
More affluent homes achieved superior outcomes, though. "The average household in the lowest-income quintile saw their liquid savings increase by just £80 during the COVID years (from 2019 to 2022), roughly identical to the two years pre-pandemic. On the other hand, the average household in the wealthiest fifth saw their cash reserves rise by £4,200," the report finds.
