According to new analysis, the typical earner in the UK would need half a century of salary to reach the wealth level of the most affluent 10% in the country.
Widening Financial Divide Across Decades
This research examined net worth information from the Covid pandemic period and discovered that back in 2006-08, it would have required nearly four decades of typical employment income to reach the richest segment of the wealth distribution.
An economic expert involved with the study stated: "Financial divides in Britain are presently so substantial that a typical full-time employee saving all their earnings throughout their career would still not be able to reach the top of the financial hierarchy."
Measuring the Economic Gap
The research found that the disparity between the assets of the typical individual and a person belonging to the wealthiest decile was £1 million in 2006-08, but had widened to £1.3m in real terms by the pandemic years.
The researcher added: "These disparities are doubly concerning as wealth mobility in Britain is limited – individuals who begin life well-off tend to remain affluent, and conversely applies."
Proportional Economic Disparity
Even with the economic divide expanding in absolute terms, the portion of overall assets in the UK owned by the richest households – known as "proportional economic disparity" – has been "largely unchanged since the 1980s," according to the study.
Throughout these years, overall assets in the UK surged from thrice the yearly economic output, to approximately 7.5x.
Drivers of Financial Divide
Referred to as "passive" gains, through growing real estate costs and changes in pension valuations, were the main drivers of the expanding economic divide over the past decade, according to the analysis.
These gains generally flowed to elderly homeowners, the analysis reveals – worsening the age-based economic gap.
Intergenerational Economic Gaps
The median economic difference between people in their early 30s and those in their early 60s grew by more than 100% in real terms, from £135k in pre-financial crisis, to £310k.
Area-Based Variations
Additionally, there were significant geographic differences, with the median value of net worth in the pandemic period amounting to 290 thousand pounds in south-east England, where real estate values have tended to rise rapidly, as opposed to 110 thousand pounds in the NE of England.
Pandemic Period Consequences
During the pandemic, when numerous employees were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns reduced expenditure possibilities, the data shows countless homes were able to save, increasing their wealth.
Wealthier families performed significantly better, nevertheless. "The average household in the bottom income bracket saw their cash reserves rise by merely £80 over the pandemic period (across the pandemic timeframe), approximately equivalent to the 24 months before COVID. In contrast, the typical family in the highest income quintile saw their available funds rise by £4,200," the analysis concludes.
