According to recent research, the average employee in the UK would need half a century of earnings to reach the financial standing of the wealthiest 10% nationwide.
Growing Financial Divide Across Decades
This research analyzed net worth information covering the recent health crisis years and discovered that during the mid-2000s, it would have taken 38 years' worth of average worker salary to reach the wealthiest decile of the financial hierarchy.
A research lead involved with the analysis 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 financial hierarchy."
Quantifying the Wealth Divide
The study found that the difference between the net worth of the typical individual and an individual in the wealthiest decile was £1 million in the pre-crisis period, but had expanded to £1.3 million in inflation-adjusted terms by recent times.
The analyst further stated: "These disparities are especially alarming as wealth mobility in Britain is low – those who commence life wealthy tend to remain affluent, and conversely applies."
Comparative Financial Divide
Despite the economic divide growing in actual numbers, the percentage of overall assets in the UK held by the most affluent homes – termed "relative wealth inequality" – has been "mostly consistent since the eighties," according to the study.
During this period, complete net worth in the UK increased dramatically from triple the annual GDP, to nearly seven and a half times.
Drivers of Financial Divide
So-called "automatic" gains, through increasing property values and changes in retirement fund assessments, were the main drivers of the widening wealth gap over the past decade, per the analysis.
These appreciations tended to accrue to elderly homeowners, the research shows – worsening the intergenerational wealth divide.
Age-Based Wealth Disparities
The average wealth gap between thirty-somethings and sixty-somethings increased over twofold in real terms, from £135k in the mid-2000s, to £310k.
Geographic Differences
There were also significant regional variations, with the median value of wealth in 2020-22 amounting to 290 thousand pounds in south-east England, where real estate values have typically increased quickly, versus £110k in the north-east.
COVID Era Impact
During the pandemic, when countless laborers were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the statistics indicate many households were able to save, increasing their wealth.
Wealthier families fared much better, though. "The typical family in the bottom income bracket saw their cash reserves increase by just £80 over the pandemic period (across the pandemic timeframe), broadly the same as the 24 months before COVID. Conversely, the average household in the top income bracket saw their cash reserves grow by 4,200 pounds," the analysis concludes.
