According to recent analysis, the typical employee in the UK would need 52 years' worth of salary to reach the financial standing of the richest 10% of the population.
Growing Wealth Gap Across Decades
This research examined wealth distribution data covering the Covid pandemic period 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 wealth distribution.
An economic expert part of the report commented: "Financial divides in Britain are presently so substantial that a average worker saving all their earnings throughout their career would still not be able to achieve the peak of the economic scale."
Assessing the Wealth Divide
The study found that the gap between the net worth of the median citizen and someone in the richest segment was one million pounds in the mid-2000s, but had increased to £1.3m in actual value by 2020-22.
The researcher further stated: "These disparities are especially alarming as financial progression in Britain is restricted – those who commence life well-off tend to stay wealthy, and vice versa."
Comparative Financial Divide
Despite the economic divide growing in specific figures, the percentage of total wealth in the UK held by the most affluent homes – termed "relative wealth inequality" – has been "largely unchanged since the 1980s," according to the research.
Over this timeframe, complete net worth in the UK increased dramatically from thrice the gross domestic product, to almost 7.5 times.
Drivers of Financial Divide
Referred to as "passive" appreciation, via growing real estate costs and adjustments to pension valuations, were the main drivers of the widening wealth gap over the past decade, according to the study.
These increases tended to accrue to elderly homeowners, the analysis reveals – worsening the intergenerational wealth divide.
Age-Based Financial Divides
The median economic difference between individuals aged 30-34 and sixty-somethings grew by more than 100% in inflation-adjusted terms, from £135k in pre-financial crisis, to 310 thousand pounds.
Geographic Differences
There were also stark area-based disparities, with the typical amount of net worth in the pandemic period standing at £290k in the southeastern region, where housing costs have tended to rise rapidly, versus £110,000 in the northeastern region.
Health Crisis Years Effects
Throughout the COVID period, when millions of workers were covered under the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the data shows many households were capable of accumulating, growing their net worth.
More affluent homes achieved superior outcomes, though. "The average household in the lowest-income quintile saw their available funds rise by merely £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the 24 months before COVID. In contrast, the average household in the wealthiest fifth saw their available funds rise by £4,200," the report finds.
