Based on recent research, the typical employee in the UK would require over five decades of income to attain the wealth level of the wealthiest 10% nationwide.
Growing Financial Divide Over Time
The study analyzed net worth data covering the 2020-22 timeframe and discovered that during the pre-financial crisis era, it would have required 38 years' worth of median full-time earnings to enter the wealthiest decile of the wealth distribution.
A research lead associated with the report observed: "Financial divides in Britain are now so large that a typical full-time employee accumulating their complete salary throughout their career would still not be able to achieve the peak of the economic scale."
Assessing the Wealth Divide
The analysis discovered that the disparity between the wealth of the average person and an individual in the wealthiest decile was £1 million in the mid-2000s, but had widened to £1.3 million in real terms by 2020-22.
The economist further stated: "These differences are doubly concerning as economic movement in Britain is limited – those who commence life affluent tend to stay wealthy, and the opposite holds true."
Comparative Financial Divide
Even with the wealth gap expanding in absolute terms, the share of overall assets in the UK held by the richest households – termed "proportional economic disparity" – has been "largely unchanged since the 1980s era," according to the study.
Over this timeframe, overall assets in the UK rose substantially from triple the gross domestic product, to nearly seven and a half times.
Factors of Economic Disparity
Referred to as "automatic" appreciation, via growing real estate costs and variations in pension valuations, were the main drivers of the widening wealth gap from 2010 onward, according to the study.
These increases typically went to older, property-owning households, the analysis reveals – worsening the intergenerational wealth divide.
Age-Based Wealth Disparities
The typical financial disparity between thirty-somethings and people aged 60-64 more than doubled in inflation-adjusted terms, from £135k in 2006-08, to £310k.
Regional Variations
Additionally, there were stark area-based disparities, with the typical amount of wealth in the pandemic period reaching £290k in the southeastern region, where housing costs have typically increased quickly, compared with £110,000 in the NE of England.
COVID Era Consequences
During the pandemic, when numerous employees were covered under the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the data shows numerous families were capable of accumulating, increasing their wealth.
More affluent homes performed significantly better, however. "The average household in the bottom income bracket saw their liquid savings grow by only eighty pounds over the pandemic period (2019-20 to 2021-22), roughly identical to the two years pre-pandemic. On the other hand, the typical family in the wealthiest fifth saw their liquid savings increase by £4,200," the study reveals.