Per recent research, the typical earner in the UK would require half a century of earnings to achieve the financial standing of the most affluent 10% in the country.
Growing Financial Divide Over Time
This research analyzed net worth data covering the Covid pandemic period and found that during 2006-08, it would have needed 38 years of median full-time earnings to reach the richest segment of the economic ladder.
A research lead part of the analysis stated: "Financial divides in Britain are currently so significant that a regular employee setting aside their entire income across their entire working life would still not be able to achieve the peak of the wealth ladder."
Quantifying the Economic Gap
The research revealed that the gap between the wealth of the average person and a person belonging to the wealthiest decile was £1m in the mid-2000s, but had widened to £1.3m in inflation-adjusted terms by recent times.
The economist continued: "These disparities are especially alarming as financial progression in Britain is restricted – those who commence life well-off tend to remain affluent, and the opposite holds true."
Proportional Economic Disparity
Even with the economic divide growing in specific figures, the percentage of total wealth in the UK owned by the wealthiest families – called "comparative financial divide" – has been "mostly consistent since the 1980s era," according to the analysis.
During this period, total wealth in the UK rose substantially from three times the gross domestic product, to approximately 7.5x.
Drivers of Financial Divide
So-called "automatic" gains, by means of increasing property values and changes in superannuation evaluations, were the key contributors of the widening wealth gap since 2010, per the report.
These appreciations typically went to senior citizens with real estate, the analysis reveals – exacerbating the intergenerational wealth divide.
Intergenerational Wealth Disparities
The average wealth gap between thirty-somethings and sixty-somethings grew by more than 100% in actual value, from 135 thousand pounds in 2006-08, to £310,000.
Area-Based Variations
There were also significant regional variations, with the median value of wealth in 2020-22 standing at 290 thousand pounds in the SE of England, where real estate values have generally grown substantially, as opposed to £110k in the NE of England.
Pandemic Period Effects
Amid the health crisis, when countless laborers were supported by the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the statistics indicate many households were able to save, growing their net worth.
Higher-income households achieved superior outcomes, though. "The average household in the poorest fifth saw their cash reserves grow by only eighty pounds throughout the health crisis (2019-20 to 2021-22), approximately equivalent to the pre-crisis period. In contrast, the typical family in the top income bracket saw their liquid savings rise by £4,200," the analysis concludes.
