Per recent analysis, the average employee in the UK would need over five decades of income to attain the wealth level of the most affluent 10% in the country.
Widening Financial Divide Through the Years
This research reviewed financial assets statistics covering the recent health crisis years and determined that back in the pre-financial crisis era, it would have taken 38 years of typical employment income to enter the wealthiest decile of the financial hierarchy.
A senior economist associated with the study stated: "Wealth gaps in Britain are presently so substantial that a typical full-time employee saving all their earnings across their entire working life would still not be able to achieve the peak of the wealth ladder."
Measuring the Economic Gap
The study discovered that the gap between the wealth of the typical individual and someone in the wealthiest decile was £1 million in 2006-08, but had increased to 1.3 million pounds in real terms by the pandemic years.
The economist further stated: "These gaps are especially alarming as economic movement in Britain is low – individuals who begin life well-off tend to continue being rich, and vice versa."
Proportional Economic Disparity
Despite the financial disparity growing in actual numbers, the portion of total wealth in the UK owned by the richest households – known as "proportional economic disparity" – has been "largely unchanged since the eighties," per the study.
Throughout these years, total wealth in the UK rose substantially from three times the annual GDP, to nearly seven and a half times.
Drivers of Financial Divide
Termed "unearned" appreciation, through increasing property values and changes in superannuation evaluations, were the main drivers of the widening wealth gap since 2010, as stated in the study.
These gains tended to accrue to elderly homeowners, the research shows – intensifying the generational financial disparity.
Intergenerational Economic Gaps
The average wealth gap between individuals aged 30-34 and sixty-somethings increased over twofold in actual value, from £135k in the mid-2000s, to 310 thousand pounds.
Area-Based Variations
There were also significant regional variations, with the median value of assets in recent years standing at £290k in south-east England, where real estate values have tended to rise rapidly, as opposed to £110k in the NE of England.
COVID Era Impact
Throughout the COVID period, when millions of workers were protected by the taxpayer-backed furlough scheme, and Covid shutdowns curtailed consumption options, the information reveals countless homes were able to save, increasing their wealth.
Wealthier families fared much better, however. "The typical family in the bottom income bracket saw their available funds increase by just £80 during the COVID years (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. On the other hand, the median home in the top income bracket saw their available funds rise by £4,200," the analysis concludes.
