According to recent research, the average employee in the UK would need half a century of income to achieve the financial standing of the most affluent 10% of the population.
Expanding Financial Divide Across Decades
This research reviewed financial assets data covering the recent health crisis years and found that during 2006-08, it would have taken 38 years' worth of typical employment income to enter the richest segment of the financial hierarchy.
An economic expert involved with the report observed: "Financial divides in Britain are presently so substantial that a average worker setting aside their entire income across their entire working life would still not be able to achieve the peak of the financial hierarchy."
Assessing the Economic Gap
The analysis revealed that the gap between the assets of the average person and a person belonging to the richest segment was £1m in the pre-crisis period, but had increased to £1.3 million in inflation-adjusted terms by 2020-22.
The analyst further stated: "These differences are doubly concerning as wealth mobility in Britain is restricted – people that start life well-off tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Despite the financial disparity expanding in absolute terms, the percentage of overall assets in the UK owned by the wealthiest families – called "comparative financial divide" – has been "broadly stable since the 1980s," per the analysis.
During this period, overall assets in the UK surged from three times the gross domestic product, to approximately 7.5x.
Contributors of Economic Disparity
Termed "unearned" gains, through rising house prices and changes in superannuation evaluations, were the primary factors of the expanding economic divide from 2010 onward, according to the study.
These appreciations tended to accrue to elderly homeowners, the research shows – worsening the age-based economic gap.
Generational Wealth Disparities
The average wealth gap between individuals aged 30-34 and sixty-somethings grew by more than 100% in actual value, from £135k in 2006-08, to £310k.
Geographic Disparities
There were also pronounced regional variations, with the median value of assets in 2020-22 amounting to 290 thousand pounds in south-east England, where real estate values have tended to rise rapidly, compared with £110k in the northeastern region.
COVID Era Effects
During the pandemic, when countless laborers were supported by the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the statistics indicate many households were capable of accumulating, increasing their wealth.
Higher-income households performed significantly better, nevertheless. "The average household in the lowest-income quintile saw their liquid savings increase by just £80 during the COVID years (from 2019 to 2022), broadly the same as the 24 months before COVID. In contrast, the typical family in the wealthiest fifth saw their liquid savings grow by 4,200 pounds," the report finds.
