Based on new research, the median employee in the UK would need half a century of earnings to reach the net worth of the wealthiest 10% in the country.
Widening Financial Divide Over Time
The study reviewed net worth statistics covering the 2020-22 timeframe and found that back in the pre-financial crisis era, it would have needed 38 years of typical employment income to reach the wealthiest decile of the economic ladder.
A senior economist part of the study observed: "Financial divides in Britain are currently so significant that a typical full-time employee saving all their earnings throughout their career would remain unable to reach the top of the economic scale."
Assessing the Financial Disparity
The analysis revealed that the gap between the wealth of the median citizen and an individual in the top 10% was one million pounds in 2006-08, but had increased to 1.3 million pounds in actual value by the pandemic years.
The researcher added: "These gaps are particularly worrying as financial progression in Britain is restricted – people that start life affluent tend to continue being rich, and the opposite holds true."
Relative Wealth Inequality
Even with the financial disparity growing in actual numbers, the percentage of complete net worth in the UK possessed by the richest households – known as "proportional economic disparity" – has been "largely unchanged since the eighties," as stated in the analysis.
Over this timeframe, overall assets in the UK rose substantially from three times the yearly economic output, to approximately 7.5x.
Contributors of Financial Divide
Referred to as "automatic" gains, via growing real estate costs and adjustments to pension valuations, were the main drivers of the widening wealth gap from 2010 onward, per the study.
These increases typically went to elderly homeowners, the study demonstrates – worsening the generational financial disparity.
Intergenerational Economic Gaps
The median economic difference between individuals aged 30-34 and sixty-somethings increased over twofold in actual value, from £135,000 in pre-financial crisis, to £310k.
Geographic Differences
Additionally, there were significant regional variations, with the median value of net worth in recent years amounting to £290k in the southeastern region, where real estate values have generally grown substantially, versus £110,000 in the northeastern region.
Pandemic Period Consequences
Amid the health crisis, when countless laborers were covered under the taxpayer-backed furlough scheme, and pandemic lockdowns reduced expenditure possibilities, the data shows many households were in a position to set aside money, enhancing their financial standing.
More affluent homes fared much better, however. "The average household in the poorest fifth saw their liquid savings grow by only eighty pounds over the pandemic period (across the pandemic timeframe), broadly the same as the 24 months before COVID. On the other hand, the typical family in the highest income quintile saw their liquid savings grow by 4,200 pounds," the study reveals.
