According to new research, the average employee in the UK would require 52 years' worth of salary to attain the financial standing of the richest 10% in the country.
Growing Financial Divide Over Time
The analysis examined wealth distribution statistics covering the 2020-22 timeframe and found that during 2006-08, it would have required 38 years' worth of median full-time earnings to enter the wealthiest decile of the financial hierarchy.
A senior economist involved with the study observed: "Economic disparities in Britain are now so large that a regular employee accumulating their complete salary throughout their career would continue to be incapable to achieve the peak of the financial hierarchy."
Assessing the Wealth Divide
The analysis revealed that the gap between the assets of the average person and an individual in the top 10% was £1 million in 2006-08, but had expanded to £1.3m in actual value by the pandemic years.
The researcher continued: "These disparities are especially alarming as economic movement in Britain is restricted – individuals who begin life affluent tend to remain affluent, and vice versa."
Relative Wealth Inequality
Despite the economic divide growing in specific figures, the percentage of overall assets in the UK held by the most affluent homes – called "relative wealth inequality" – has been "mostly consistent since the eighties," as stated in the study.
Over this timeframe, total wealth in the UK rose substantially from three times the yearly economic output, to nearly seven and a half times.
Contributors of Financial Divide
Referred to as "automatic" appreciation, via increasing property values and adjustments to pension valuations, were the key contributors of the expanding economic divide from 2010 onward, per the study.
These gains typically went to older, property-owning households, the research shows – worsening the intergenerational wealth divide.
Generational Financial Divides
The median economic difference between individuals aged 30-34 and those in their early 60s more than doubled in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to £310,000.
Area-Based Variations
There were also significant regional variations, with the median value of net worth in recent years standing at 290 thousand pounds in south-east England, where property prices have generally grown substantially, compared with £110,000 in the northeastern region.
COVID Era Effects
During the pandemic, when millions of workers were supported by the government-supported job retention program, and Covid shutdowns reduced expenditure possibilities, the data shows many households were in a position to set aside money, increasing their wealth.
Wealthier families performed significantly better, though. "The average household in the lowest-income quintile saw their cash reserves rise by merely £80 over the pandemic period (2019-20 to 2021-22), approximately equivalent to the 24 months before COVID. In contrast, the median home in the wealthiest fifth saw their liquid savings grow by 4,200 pounds," the analysis concludes.
