Per recent research, the median employee in the UK would have to work over five decades of salary to achieve the wealth level of the most affluent 10% nationwide.
Expanding Wealth Gap Across Decades
The analysis analyzed financial assets data including the 2020-22 timeframe and found that during 2006-08, it would have taken 38 years' worth of typical employment income to enter the richest segment of the financial hierarchy.
An economic expert part of the report observed: "Financial divides in Britain are presently so substantial that a typical full-time employee accumulating their complete salary during their working years would remain unable to reach the top of the financial hierarchy."
Measuring the Wealth Divide
The research revealed that the disparity between the net worth of the average person and an individual in the wealthiest decile was £1 million in the mid-2000s, but had increased to £1.3m in actual value by 2020-22.
The analyst further stated: "These gaps are doubly concerning as financial progression in Britain is restricted – people that start life affluent tend to remain affluent, and vice versa."
Relative Wealth Inequality
Although the economic divide expanding in absolute terms, the portion of total wealth in the UK owned by the richest households – known as "relative wealth inequality" – has been "broadly stable since the 1980s," as stated in the analysis.
During this period, complete net worth in the UK surged from triple the annual GDP, to almost 7.5 times.
Drivers of Financial Divide
Termed "unearned" appreciation, via rising house prices and variations in retirement fund assessments, were the key contributors of the widening wealth gap over the past decade, according to the report.
These gains tended to accrue to elderly homeowners, the analysis reveals – intensifying the age-based economic gap.
Intergenerational Financial Divides
The typical financial disparity between individuals aged 30-34 and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135k in the mid-2000s, to £310,000.
Area-Based Disparities
There were also stark area-based disparities, with the typical amount of wealth in 2020-22 standing at 290 thousand pounds in south-east England, where property prices have generally grown substantially, as opposed to £110k in the northeastern region.
COVID Era Consequences
During the pandemic, when millions of workers were covered under the taxpayer-backed furlough scheme, and Covid shutdowns reduced expenditure possibilities, the statistics indicate numerous families were able to save, enhancing their financial standing.
Wealthier families performed significantly better, however. "The median home in the lowest-income quintile saw their available funds increase by just £80 over the pandemic period (from 2019 to 2022), approximately equivalent to the 24 months before COVID. In contrast, the average household in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the report finds.