Based on fresh research, the average employee in the UK would need over five decades of salary to reach the wealth level of the most affluent 10% of the population.
Expanding Financial Divide Across Decades
This research examined net worth information including the recent health crisis years and found that in the pre-financial crisis era, it would have taken 38 years' worth of typical employment income to reach the top 10th of the wealth distribution.
A research lead part of the report observed: "Economic disparities in Britain are now so large that a regular employee setting aside their entire income throughout their career would still not be able to reach the top of the financial hierarchy."
Measuring the Economic Gap
The study discovered that the difference between the net worth of the median citizen and a person belonging to the richest segment was £1m in the mid-2000s, but had expanded to 1.3 million pounds in real terms by recent times.
The economist added: "These differences are doubly concerning as wealth mobility in Britain is low – individuals who begin life wealthy tend to remain affluent, and conversely applies."
Comparative Financial Divide
Even with the economic divide widening in specific figures, the portion of total wealth in the UK owned by the wealthiest families – known as "relative wealth inequality" – has been "largely unchanged since the 1980s," per the analysis.
During this period, overall assets in the UK increased dramatically from three times the gross domestic product, to almost 7.5 times.
Factors of Economic Disparity
So-called "unearned" gains, by means of increasing property values and changes in superannuation evaluations, were the key contributors of the widening wealth gap since 2010, as stated in the report.
These gains generally flowed to elderly homeowners, the study demonstrates – exacerbating the generational financial disparity.
Intergenerational Economic Gaps
The median economic difference between thirty-somethings and people aged 60-64 grew by more than 100% in actual value, from £135,000 in pre-financial crisis, to £310k.
Geographic Variations
There were also pronounced geographic differences, with the average level of assets in recent years amounting to 290 thousand pounds in south-east England, where real estate values have generally grown substantially, versus 110 thousand pounds in the NE of England.
COVID Era Consequences
Throughout the COVID period, when numerous employees were covered under the taxpayer-backed furlough scheme, and pandemic lockdowns reduced expenditure possibilities, the data shows countless homes were in a position to set aside money, enhancing their financial standing.
More affluent homes achieved superior outcomes, however. "The median home in the poorest fifth saw their available funds rise by merely £80 throughout the health crisis (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. Conversely, the typical family in the wealthiest fifth saw their cash reserves increase by £4,200," the analysis concludes.
