Based on fresh research, the typical employee in the UK would require over five decades of earnings to achieve the net worth of the most affluent 10% in the country.
Growing Financial Divide Through the Years
The analysis reviewed financial assets data covering the recent health crisis years and found that in the pre-financial crisis era, it would have needed 38 years of typical employment income to enter the top 10th of the financial hierarchy.
A senior economist involved with the report stated: "Financial divides in Britain are presently so substantial that a regular employee setting aside their entire income during their working years would continue to be incapable to attain the highest level of the economic scale."
Measuring the Economic Gap
The study found that the gap between the assets of the typical individual and a person belonging to the top 10% was £1 million in the pre-crisis period, but had expanded to £1.3m in inflation-adjusted terms by recent times.
The analyst added: "These differences are doubly concerning as economic movement in Britain is restricted – those who commence life well-off tend to stay wealthy, and conversely applies."
Proportional Economic Disparity
Although the wealth gap growing in specific figures, the portion of complete net worth in the UK owned by the wealthiest families – called "comparative financial divide" – has been "broadly stable since the 1980s," according to the study.
Over this timeframe, overall assets in the UK surged from three times the annual GDP, to almost 7.5 times.
Drivers of Financial Divide
So-called "automatic" appreciation, by means of increasing property values and adjustments to retirement fund assessments, were the primary factors of the growing financial disparity from 2010 onward, according to the report.
These increases typically went to older, property-owning households, the research shows – worsening the intergenerational wealth divide.
Intergenerational Financial Divides
The average wealth gap between people in their early 30s and sixty-somethings increased over twofold in inflation-adjusted terms, from £135,000 in pre-financial crisis, to £310k.
Geographic Differences
There were also pronounced regional variations, with the average level of net worth in 2020-22 amounting to £290k in the southeastern region, where real estate values have generally grown substantially, as opposed to £110k in the northeastern region.
Health Crisis Years Impact
During the pandemic, when numerous employees were protected by the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the statistics indicate numerous families were capable of accumulating, enhancing their financial standing.
More affluent homes achieved superior outcomes, nevertheless. "The average household in the bottom income bracket saw their liquid savings rise by merely £80 over the pandemic period (across the pandemic timeframe), approximately equivalent to the pre-crisis period. Conversely, the median home in the wealthiest fifth saw their liquid savings increase by £4,200," the study reveals.
