Based on new analysis, the average worker in the UK would require 52 years' worth of salary to attain the wealth level of the wealthiest 10% nationwide.
Expanding Economic Disparity Across Decades
The analysis analyzed financial assets data from the Covid pandemic period and found that during the mid-2000s, it would have taken nearly four decades of median full-time earnings to join the wealthiest decile of the financial hierarchy.
A research lead associated with the analysis stated: "Economic disparities in Britain are now so large that a typical full-time employee saving all their earnings across their entire working life would continue to be incapable to reach the top of the wealth ladder."
Quantifying the Economic Gap
The analysis found that the disparity between the wealth of the average person and someone in the top 10% was £1 million in the mid-2000s, but had increased to £1.3 million in inflation-adjusted terms by 2020-22.
The researcher added: "These gaps are doubly concerning as financial progression in Britain is low – individuals who begin life affluent tend to continue being rich, and vice versa."
Comparative Financial Divide
Despite the economic divide expanding in actual numbers, the portion of total wealth in the UK held by the wealthiest families – known as "comparative financial divide" – has been "mostly consistent since the eighties," according to the analysis.
Throughout these years, complete net worth in the UK rose substantially from three times the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "passive" gains, by means of increasing property values and variations in superannuation evaluations, were the key contributors of the widening wealth gap since 2010, according to the analysis.
These appreciations generally flowed to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Intergenerational Economic Gaps
The average wealth gap between thirty-somethings and people aged 60-64 grew by more than 100% in real terms, from £135,000 in 2006-08, to £310,000.
Geographic Differences
Additionally, there were pronounced geographic differences, with the average level of net worth in 2020-22 standing at 290 thousand pounds in south-east England, where housing costs have typically increased quickly, compared with £110k in the north-east.
COVID Era Impact
Throughout the COVID period, when numerous employees were covered under the taxpayer-backed furlough scheme, and health crisis restrictions limited opportunities for spending, the statistics indicate many households were in a position to set aside money, enhancing their financial standing.
Wealthier families achieved superior outcomes, though. "The typical family in the lowest-income quintile saw their cash reserves increase by just £80 during the COVID years (from 2019 to 2022), broadly the same as the pre-crisis period. Conversely, the average household in the top income bracket saw their liquid savings increase by £4,200," the study reveals.
