Per recent study, the average employee in the UK would need 52 years' worth of income to reach the wealth level of the richest 10% of the population.
Widening Wealth Gap Through the Years
The analysis reviewed financial assets data from the 2020-22 timeframe and found that in the pre-financial crisis era, it would have needed nearly four decades of median full-time earnings to reach the top 10th of the financial hierarchy.
An economic expert associated with the report commented: "Financial divides in Britain are presently so substantial that a regular employee setting aside their entire income across their entire working life would continue to be incapable to attain the highest level of the wealth ladder."
Measuring the Financial Disparity
The study revealed that the difference between the assets of the average person and a person belonging to the wealthiest decile was one million pounds in the mid-2000s, but had widened to 1.3 million pounds in real terms by recent times.
The analyst added: "These disparities are doubly concerning as wealth mobility in Britain is limited – those who commence life affluent tend to remain affluent, and the opposite holds true."
Relative Wealth Inequality
Although the economic divide growing in absolute terms, the share of total wealth in the UK possessed by the most affluent homes – called "proportional economic disparity" – has been "mostly consistent since the eighties," per the study.
During this period, complete net worth in the UK rose substantially from three times the annual GDP, to almost 7.5 times.
Drivers of Economic Disparity
Termed "unearned" gains, through growing real estate costs and adjustments to retirement fund assessments, were the main drivers of the growing financial disparity over the past decade, per the analysis.
These increases tended to accrue to older, property-owning households, the analysis reveals – worsening the intergenerational wealth divide.
Age-Based Economic Gaps
The average wealth gap between people in their early 30s and those in their early 60s more than doubled in actual value, from 135 thousand pounds in 2006-08, to 310 thousand pounds.
Regional Variations
Furthermore, the study revealed stark regional variations, with the typical amount of wealth in the pandemic period standing at 290 thousand pounds in south-east England, where property prices have tended to rise rapidly, versus £110k in the northeastern region.
COVID Era Effects
During the pandemic, when numerous employees were protected by the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the data shows numerous families were able to save, increasing their wealth.
Higher-income households performed significantly better, though. "The average household in the lowest-income quintile saw their cash reserves increase by just £80 during the COVID years (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. Conversely, the median home in the highest income quintile saw their liquid savings grow by 4,200 pounds," the analysis concludes.
