Per fresh analysis, the typical employee in the UK would require half a century of earnings to reach the wealth level of the most affluent 10% of the population.
Growing Financial Divide Across Decades
The analysis examined wealth distribution data from the recent health crisis years and determined that during the mid-2000s, it would have taken 38 years of median full-time earnings to join the richest segment of the economic ladder.
A senior economist involved with the study stated: "Financial divides in Britain are now so large that a regular employee saving all their earnings throughout their career would continue to be incapable to reach the top of the economic scale."
Measuring the Economic Gap
The research revealed that the gap between the wealth of the median citizen and someone in the top 10% was £1 million in the pre-crisis period, but had increased to £1.3 million in real terms by the pandemic years.
The researcher continued: "These differences are doubly concerning as economic movement in Britain is low – individuals who begin life affluent tend to remain affluent, and vice versa."
Relative Wealth Inequality
Although the wealth gap growing in absolute terms, the portion of total wealth in the UK possessed by the wealthiest families – known as "proportional economic disparity" – has been "broadly stable since the 1980s era," according to the analysis.
Over this timeframe, overall assets in the UK increased dramatically from thrice the gross domestic product, to almost 7.5 times.
Factors of Financial Divide
So-called "passive" increases, by means of rising house prices and variations in retirement fund assessments, were the primary factors of the expanding economic divide from 2010 onward, according to the analysis.
These increases typically went to elderly homeowners, the study demonstrates – exacerbating the intergenerational wealth divide.
Generational Wealth Disparities
The average wealth gap between individuals aged 30-34 and those in their early 60s grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310,000.
Area-Based Variations
There were also stark area-based disparities, with the average level of net worth in 2020-22 amounting to 290 thousand pounds in south-east England, where property prices have generally grown substantially, as opposed to £110k in the north-east.
COVID Era Effects
Amid the health crisis, when numerous employees were covered under the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the data shows countless homes were able to save, enhancing their financial standing.
Wealthier families fared much better, nevertheless. "The typical family in the bottom income bracket saw their liquid savings rise by merely £80 over the pandemic period (across the pandemic timeframe), roughly identical to the 24 months before COVID. Conversely, the median home in the top income bracket saw their available funds rise by £4,200," the analysis concludes.
