Based on recent research, the average earner in the UK would have to work half a century of income to achieve the wealth level of the wealthiest 10% of the population.
Widening Financial Divide Over Time
The study analyzed financial assets information covering the 2020-22 timeframe and discovered that back in the mid-2000s, it would have required 38 years of typical employment income to reach the wealthiest decile of the wealth distribution.
An economic expert part of the report stated: "Economic disparities in Britain are presently so substantial that a regular employee saving all their earnings throughout their career would continue to be incapable to achieve the peak of the economic scale."
Measuring the Economic Gap
The study found that the disparity between the net worth of the average person and a person belonging to the richest segment was £1m in the pre-crisis period, but had increased to £1.3m in inflation-adjusted terms by the pandemic years.
The economist added: "These disparities are especially alarming as economic movement in Britain is low – individuals who begin life wealthy tend to continue being rich, and conversely applies."
Proportional Economic Disparity
Even with the economic divide widening in absolute terms, the percentage of total wealth in the UK possessed by the richest households – termed "comparative financial divide" – has been "mostly consistent since the eighties," as stated in the research.
Over this timeframe, complete net worth in the UK rose substantially from triple the annual GDP, to almost 7.5 times.
Factors of Financial Divide
Referred to as "unearned" appreciation, through rising house prices and variations in pension valuations, were the main drivers of the growing financial disparity over the past decade, according to the report.
These appreciations typically went to elderly homeowners, the research shows – exacerbating the age-based economic gap.
Generational Financial Divides
The typical financial disparity between people in their early 30s and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135,000 in 2006-08, to £310,000.
Area-Based Variations
Additionally, there were significant regional variations, with the median value of wealth in the pandemic period amounting to £290k in the southeastern region, where real estate values have tended to rise rapidly, compared with £110k in the northeastern region.
Pandemic Period Impact
Amid the health crisis, when numerous employees were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the information reveals many households were in a position to set aside money, growing their net worth.
Wealthier families fared much better, however. "The average household in the lowest-income quintile saw their cash reserves increase by just £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the pre-crisis period. Conversely, the average household in the top income bracket saw their liquid savings grow by 4,200 pounds," the analysis concludes.
