According to new analysis, the typical employee in the UK would have to work half a century of salary to reach the financial standing of the most affluent 10% of the population.
Growing Wealth Gap Across Decades
The analysis analyzed net worth information including the 2020-22 timeframe and discovered that in 2006-08, it would have taken 38 years of average worker salary to join the top 10th of the financial hierarchy.
An economic expert involved with the report stated: "Wealth gaps in Britain are now so large that a average worker accumulating their complete salary across their entire working life would continue to be incapable to attain the highest level of the financial hierarchy."
Measuring the Financial Disparity
The analysis found that the difference between the assets of the average person and an individual in the richest segment was £1m in 2006-08, but had increased to 1.3 million pounds in inflation-adjusted terms by 2020-22.
The economist continued: "These differences are especially alarming as financial progression in Britain is limited – individuals who begin life wealthy tend to stay wealthy, and vice versa."
Proportional Economic Disparity
Even with the wealth gap expanding in actual numbers, the percentage of complete net worth in the UK owned by the wealthiest families – known as "relative wealth inequality" – has been "broadly stable since the 1980s," according to the analysis.
During this period, total wealth in the UK surged from triple the annual GDP, to nearly seven and a half times.
Drivers of Financial Divide
So-called "unearned" appreciation, via growing real estate costs and changes in superannuation evaluations, were the primary factors of the growing financial disparity since 2010, per the study.
These increases typically went to senior citizens with real estate, the research shows – exacerbating the intergenerational wealth divide.
Generational Financial Divides
The average wealth gap between individuals aged 30-34 and people aged 60-64 grew by more than 100% in real terms, from 135 thousand pounds in the mid-2000s, to £310,000.
Geographic Disparities
There were also significant regional variations, with the average level of assets in recent years standing at £290,000 in the SE of England, where property prices have generally grown substantially, compared with £110,000 in the NE of England.
Pandemic Period Consequences
Amid the health crisis, when millions of workers were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the data shows numerous families were capable of accumulating, enhancing their financial standing.
More affluent homes performed significantly better, nevertheless. "The typical family in the bottom income bracket saw their cash reserves increase by just £80 over the pandemic period (across the pandemic timeframe), approximately equivalent to the pre-crisis period. In contrast, the average household in the wealthiest fifth saw their available funds rise by £4,200," the report finds.
