Based on new research, the median employee in the UK would have to work 52 years' worth of earnings to achieve the wealth level of the wealthiest 10% in the country.
Widening Economic Disparity Over Time
The analysis analyzed net worth statistics including the recent health crisis years and discovered that back in the pre-financial crisis era, it would have taken 38 years' worth of typical employment income to enter the wealthiest decile of the financial hierarchy.
A senior economist involved with the analysis commented: "Financial divides in Britain are currently so significant that a regular employee setting aside their entire income throughout their career would remain unable to reach the top of the financial hierarchy."
Quantifying the Economic Gap
The study revealed that the disparity between the net worth of the average person and a person belonging to the top 10% was £1m in the pre-crisis period, but had expanded to £1.3 million in inflation-adjusted terms by recent times.
The analyst continued: "These differences are especially alarming as financial progression in Britain is limited – people that start life affluent tend to continue being rich, and conversely applies."
Proportional Economic Disparity
Although the economic divide widening in actual numbers, the percentage of total wealth in the UK possessed by the most affluent homes – called "proportional economic disparity" – has been "broadly stable since the 1980s era," per the study.
During this period, total wealth in the UK rose substantially from thrice the annual GDP, to almost 7.5 times.
Drivers of Wealth Inequality
Termed "passive" appreciation, through growing real estate costs and adjustments to pension valuations, were the key contributors of the widening wealth gap since 2010, as stated in the report.
These increases typically went to elderly homeowners, the analysis reveals – worsening the generational financial disparity.
Generational Financial Divides
The average wealth gap between people in their early 30s and sixty-somethings more than doubled in real terms, from £135k in the mid-2000s, to 310 thousand pounds.
Geographic Variations
Additionally, there were stark geographic differences, with the typical amount of net worth in 2020-22 amounting to £290,000 in the SE of England, where property prices have typically increased quickly, versus 110 thousand pounds in the NE of England.
Pandemic Period Impact
Amid the health crisis, when millions of workers were protected by the public-funded employment protection, and Covid shutdowns reduced expenditure possibilities, the statistics indicate many households were able to save, increasing their wealth.
More affluent homes achieved superior outcomes, though. "The typical family in the bottom income bracket saw their cash reserves rise by merely £80 throughout the health crisis (from 2019 to 2022), broadly the same as the 24 months before COVID. Conversely, the average household in the highest income quintile saw their liquid savings rise by £4,200," the study reveals.
