According to new study, the average employee in the UK would require 52 years' worth of earnings to achieve the financial standing of the most affluent 10% in the country.
Growing Financial Divide Over Time
This research reviewed financial assets statistics from the recent health crisis years and determined that in the pre-financial crisis era, it would have needed nearly four decades of average worker salary to enter the wealthiest decile of the wealth distribution.
An economic expert involved with the report observed: "Economic disparities in Britain are now so large that a typical full-time employee saving all their earnings during their working years would continue to be incapable to attain the highest level of the economic scale."
Assessing the Financial Disparity
The study revealed that the gap between the assets of the average person and someone in the richest segment was one million pounds in the pre-crisis period, but had expanded to 1.3 million pounds in real terms by 2020-22.
The economist continued: "These differences are particularly worrying as economic movement in Britain is limited – people that start life well-off tend to stay wealthy, and the opposite holds true."
Comparative Financial Divide
Even with the wealth gap widening in actual numbers, the percentage of total wealth in the UK held by the most affluent homes – called "comparative financial divide" – has been "largely unchanged since the 1980s," as stated in the research.
During this period, complete net worth in the UK surged from three times the yearly economic output, to almost 7.5 times.
Factors of Wealth Inequality
Termed "unearned" gains, through rising house prices and changes in superannuation evaluations, were the key contributors of the expanding economic divide over the past decade, according to the study.
These appreciations tended to accrue to senior citizens with real estate, the study demonstrates – exacerbating the intergenerational wealth divide.
Age-Based Financial Divides
The median economic difference between thirty-somethings and sixty-somethings grew by more than 100% in real terms, from £135,000 in the mid-2000s, to 310 thousand pounds.
Area-Based Differences
Furthermore, the study revealed significant regional variations, with the median value of assets in 2020-22 standing at 290 thousand pounds in south-east England, where housing costs have tended to rise rapidly, as opposed to £110k in the northeastern region.
Pandemic Period Impact
Amid the health crisis, when millions of workers were covered under the government-supported job retention program, and health crisis restrictions curtailed consumption options, the data shows numerous families were in a position to set aside money, increasing their wealth.
Wealthier families performed significantly better, however. "The average household in the bottom income bracket saw their liquid savings rise by merely £80 during the COVID years (2019-20 to 2021-22), broadly the same as the 24 months before COVID. In contrast, the average household in the wealthiest fifth saw their available funds grow by 4,200 pounds," the study reveals.
