According to fresh research, the typical employee in the UK would have to work over five decades of salary to attain the wealth level of the richest 10% of the population.
Growing Wealth Gap Across Decades
This research reviewed financial assets data including the Covid pandemic period and determined that during the pre-financial crisis era, it would have needed 38 years of average worker salary to join the richest segment of the economic ladder.
A research lead involved with the report commented: "Financial divides in Britain are now so large that a average worker setting aside their entire income during their working years would still not be able to achieve the peak of the wealth ladder."
Measuring the Financial Disparity
The analysis discovered that the difference between the assets of the average person and someone in the richest segment was £1m in 2006-08, but had expanded to £1.3 million in real terms by recent times.
The researcher further stated: "These disparities are particularly worrying as economic movement in Britain is limited – individuals who begin life affluent tend to remain affluent, and conversely applies."
Comparative Financial Divide
Despite the economic divide growing in actual numbers, the portion of complete net worth in the UK owned by the most affluent homes – termed "comparative financial divide" – has been "mostly consistent since the 1980s," according to the analysis.
Over this timeframe, overall assets in the UK surged from triple the annual GDP, to nearly seven and a half times.
Drivers of Financial Divide
Termed "unearned" increases, through rising house prices and adjustments to superannuation evaluations, were the primary factors of the widening wealth gap since 2010, according to the analysis.
These appreciations tended to accrue to elderly homeowners, the research shows – exacerbating the generational financial disparity.
Age-Based Economic Gaps
The typical financial disparity between people in their early 30s and sixty-somethings increased over twofold in actual value, from £135k in the mid-2000s, to £310k.
Geographic Variations
Furthermore, the study revealed pronounced geographic differences, with the typical amount of net worth in recent years amounting to £290k in the SE of England, where housing costs have generally grown substantially, versus 110 thousand pounds in the northeastern region.
COVID Era Consequences
Throughout the COVID period, when numerous employees were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the data shows many households were in a position to set aside money, growing their net worth.
More affluent homes achieved superior outcomes, though. "The typical family in the poorest fifth saw their cash reserves increase by just £80 during the COVID years (2019-20 to 2021-22), broadly the same as the two years pre-pandemic. On the other hand, the median home in the top income bracket saw their liquid savings rise by £4,200," the report finds.
