Per recent study, the average employee in the UK would have to work half a century of income to attain the net worth of the most affluent 10% of the population.
Widening Wealth Gap Over Time
This research analyzed financial assets information covering the recent health crisis years and discovered that in the pre-financial crisis era, it would have required 38 years of typical employment income to join the wealthiest decile of the economic ladder.
A research lead involved with the analysis observed: "Wealth gaps in Britain are currently so significant that a typical full-time employee setting aside their entire income across their entire working life would remain unable to attain the highest level of the economic scale."
Measuring the Financial Disparity
The study found that the difference between the wealth of the average person and someone in the top 10% was £1 million in the pre-crisis period, but had expanded to £1.3m in actual value by 2020-22.
The analyst further stated: "These gaps are especially alarming as financial progression in Britain is limited – those who commence life well-off tend to continue being rich, and conversely applies."
Comparative Financial Divide
Despite the financial disparity widening in absolute terms, the percentage of overall assets in the UK held by the wealthiest families – termed "proportional economic disparity" – has been "broadly stable since the eighties," as stated in the study.
Throughout these years, complete net worth in the UK surged from thrice the gross domestic product, to nearly seven and a half times.
Contributors of Financial Divide
Termed "unearned" appreciation, through rising house prices and changes in retirement fund assessments, were the key contributors of the growing financial disparity over the past decade, per the study.
These appreciations typically went to older, property-owning households, the analysis reveals – exacerbating the intergenerational wealth divide.
Age-Based Financial Divides
The typical financial disparity between thirty-somethings and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135,000 in pre-financial crisis, to £310k.
Geographic Disparities
Additionally, there were pronounced geographic differences, with the typical amount of assets in 2020-22 standing at £290,000 in the SE of England, where property prices have generally grown substantially, versus £110k in the NE of England.
COVID Era Impact
During the pandemic, when numerous employees were covered under the government-supported job retention program, and health crisis restrictions limited opportunities for spending, the information reveals numerous families were in a position to set aside money, growing their net worth.
Higher-income households achieved superior outcomes, though. "The average household in the poorest fifth saw their liquid savings grow by only eighty pounds over the pandemic period (from 2019 to 2022), approximately equivalent to the pre-crisis period. Conversely, the average household in the top income bracket saw their available funds increase by £4,200," the report finds.
