According to new research, the typical employee in the UK would have to work over five decades of earnings to attain the financial standing of the richest 10% of the population.
Growing Financial Divide Over Time
This research examined net worth statistics covering the recent health crisis years and discovered that during 2006-08, it would have taken 38 years' worth of typical employment income to enter the top 10th of the financial hierarchy.
An economic expert associated with the analysis commented: "Financial divides in Britain are now so large that a typical full-time employee accumulating their complete salary during their working years would continue to be incapable to attain the highest level of the economic scale."
Assessing the Economic Gap
The study found that the difference between the assets of the average person and an individual in the richest segment was £1 million in the mid-2000s, but had expanded to £1.3m in actual value by the pandemic years.
The analyst further stated: "These disparities are particularly worrying as financial progression in Britain is limited – individuals who begin life wealthy tend to continue being rich, and the opposite holds true."
Proportional Economic Disparity
Although the financial disparity widening in specific figures, the portion of total wealth in the UK owned by the most affluent homes – known as "relative wealth inequality" – has been "broadly stable since the 1980s era," as stated in the study.
Over this timeframe, overall assets in the UK increased dramatically from three times the annual GDP, to approximately 7.5x.
Factors of Financial Divide
Termed "passive" gains, by means of increasing property values and variations in retirement fund assessments, were the primary factors of the widening wealth gap over the past decade, per the analysis.
These increases typically went to older, property-owning households, the study demonstrates – intensifying the intergenerational wealth divide.
Generational Economic Gaps
The average wealth gap between individuals aged 30-34 and sixty-somethings more than doubled in real terms, from £135,000 in pre-financial crisis, to £310,000.
Regional Disparities
There were also significant geographic differences, with the median value of net worth in recent years reaching £290,000 in south-east England, where property prices have typically increased quickly, as opposed to 110 thousand pounds in the northeastern region.
Pandemic Period Impact
Throughout the COVID period, when numerous employees were supported by the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the data shows many households were able to save, growing their net worth.
More affluent homes fared much better, however. "The typical family in the lowest-income quintile saw their liquid savings increase by just £80 over the pandemic period (2019-20 to 2021-22), broadly the same as the pre-crisis period. On the other hand, the typical family in the highest income quintile saw their liquid savings increase by £4,200," the analysis concludes.
