Based on new study, the typical employee in the UK would have to work 52 years' worth of earnings to reach the financial standing of the most affluent 10% in the country.
Growing Financial Divide Over Time
The study analyzed financial assets data covering the 2020-22 timeframe and determined that during the pre-financial crisis era, it would have required 38 years' worth of average worker salary to reach the top 10th of the financial hierarchy.
A senior economist associated with the study stated: "Wealth gaps in Britain are currently so significant that a regular employee accumulating their complete salary throughout their career would still not be able to achieve the peak of the wealth ladder."
Assessing the Economic Gap
The research found that the difference between the net worth of the typical individual and an individual in the richest segment was £1 million in the mid-2000s, but had increased to £1.3m in inflation-adjusted terms by 2020-22.
The analyst added: "These gaps are doubly concerning as economic movement in Britain is low – individuals who begin life wealthy tend to remain affluent, and the opposite holds true."
Proportional Economic Disparity
Despite the financial disparity widening in specific figures, the percentage of overall assets in the UK owned by the most affluent homes – known as "proportional economic disparity" – has been "largely unchanged since the 1980s era," according to the study.
Throughout these years, total wealth in the UK increased dramatically from thrice the gross domestic product, to approximately 7.5x.
Factors of Wealth Inequality
Referred to as "passive" gains, by means of rising house prices and changes in retirement fund assessments, were the primary factors of the expanding economic divide over the past decade, per the study.
These increases tended to accrue to senior citizens with real estate, the research shows – exacerbating the generational financial disparity.
Intergenerational Economic Gaps
The typical financial disparity between people in their early 30s and those in their early 60s grew by more than 100% in real terms, from 135 thousand pounds in the mid-2000s, to £310k.
Area-Based Disparities
Furthermore, the study revealed significant regional variations, with the average level of net worth in the pandemic period amounting to £290k in the SE of England, where property prices have typically increased quickly, versus £110k in the north-east.
Health Crisis Years Consequences
Amid the health crisis, when numerous employees were supported by the public-funded employment protection, and Covid shutdowns curtailed consumption options, the statistics indicate countless homes were able to save, increasing their wealth.
More affluent homes performed significantly better, nevertheless. "The average household in the poorest fifth saw their cash reserves increase by just £80 during the COVID years (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. Conversely, the typical family in the wealthiest fifth saw their liquid savings increase by £4,200," the report finds.
