Based on recent analysis, the average employee in the UK would require 52 years' worth of earnings to achieve the financial standing of the most affluent 10% in the country.
Expanding Financial Divide Over Time
The study examined wealth distribution statistics including the Covid pandemic period and discovered that in the mid-2000s, it would have needed nearly four decades of average worker salary to reach the richest segment of the financial hierarchy.
A research lead associated with the analysis observed: "Wealth gaps in Britain are currently so significant that a average worker saving all their earnings across their entire working life would continue to be incapable to reach the top of the economic scale."
Assessing the Financial Disparity
The analysis revealed that the difference between the wealth of the typical individual and someone in the richest segment was one million pounds in 2006-08, but had widened to £1.3m in real terms by the pandemic years.
The analyst added: "These differences are doubly concerning as economic movement in Britain is restricted – people that start life affluent tend to remain affluent, and the opposite holds true."
Relative Wealth Inequality
Even with the wealth gap widening in absolute terms, the percentage of complete net worth in the UK possessed by the richest households – called "comparative financial divide" – has been "broadly stable since the 1980s," according to the study.
During this period, overall assets in the UK rose substantially from thrice the annual GDP, to nearly seven and a half times.
Drivers of Financial Divide
Termed "automatic" gains, via growing real estate costs and changes in pension valuations, were the primary factors of the expanding economic divide from 2010 onward, according to the analysis.
These increases generally flowed to elderly homeowners, the study demonstrates – worsening the age-based economic gap.
Age-Based Financial Divides
The average wealth gap between people in their early 30s and those in their early 60s more than doubled in inflation-adjusted terms, from £135k in 2006-08, to 310 thousand pounds.
Geographic Variations
Furthermore, the study revealed pronounced geographic differences, with the average level of assets in recent years amounting to £290k in south-east England, where property prices have typically increased quickly, as opposed to 110 thousand pounds in the north-east.
COVID Era Impact
Amid the health crisis, when numerous employees were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the information reveals many households were in a position to set aside money, enhancing their financial standing.
Higher-income households fared much better, though. "The median home in the lowest-income quintile saw their cash reserves increase by just £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the two years pre-pandemic. On the other hand, the median home in the wealthiest fifth saw their liquid savings grow by 4,200 pounds," the analysis concludes.
