Per new study, the typical employee in the UK would have to work 52 years' worth of income to reach the net worth of the wealthiest 10% of the population.
Expanding Wealth Gap Over Time
This research examined financial assets data covering the Covid pandemic period and found that in 2006-08, it would have required 38 years of typical employment income to enter the wealthiest decile of the wealth distribution.
A senior economist part of the report commented: "Financial divides in Britain are currently so significant that a typical full-time employee setting aside their entire income throughout their career would continue to be incapable to achieve the peak of the economic scale."
Assessing the Financial Disparity
The study revealed that the difference between the assets of the typical individual and an individual in the richest segment was £1 million in the pre-crisis period, but had expanded to £1.3m in inflation-adjusted terms by 2020-22.
The economist further stated: "These differences are doubly concerning as wealth mobility in Britain is restricted – those who commence life wealthy tend to continue being rich, and vice versa."
Comparative Financial Divide
Although the economic divide widening in absolute terms, the share of complete net worth in the UK owned by the wealthiest families – termed "proportional economic disparity" – has been "largely unchanged since the 1980s," per the research.
Throughout these years, overall assets in the UK rose substantially from thrice the yearly economic output, to nearly seven and a half times.
Contributors of Financial Divide
Termed "passive" appreciation, through increasing property values and changes in retirement fund assessments, were the main drivers of the growing financial disparity since 2010, according to the study.
These increases typically went to elderly homeowners, the analysis reveals – exacerbating the generational financial disparity.
Age-Based Wealth Disparities
The average wealth gap between people in their early 30s and people aged 60-64 more than doubled in actual value, from 135 thousand pounds in the mid-2000s, to £310k.
Area-Based Variations
Additionally, there were significant geographic differences, with the average level of wealth in 2020-22 amounting to £290,000 in the SE of England, where housing costs have typically increased quickly, compared with 110 thousand pounds in the NE of England.
COVID Era Effects
Amid the health crisis, when millions of workers were protected by the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the statistics indicate countless homes were able to save, increasing their wealth.
Wealthier families achieved superior outcomes, though. "The typical family in the poorest fifth saw their liquid savings increase by just £80 over the pandemic period (from 2019 to 2022), roughly identical to the pre-crisis period. On the other hand, the typical family in the top income bracket saw their cash reserves increase by £4,200," the report finds.
