Based on new analysis, the average employee in the UK would have to work half a century of earnings to attain the financial standing of the most affluent 10% of the population.
Growing Financial Divide Through the Years
This research analyzed financial assets information from the 2020-22 timeframe and discovered that during 2006-08, it would have taken nearly four decades of typical employment income to join the wealthiest decile of the financial hierarchy.
A research lead part of the analysis commented: "Financial divides in Britain are now so large that a regular employee setting aside their entire income throughout their career would remain unable to attain the highest level of the financial hierarchy."
Measuring the Wealth Divide
The analysis found that the gap between the net worth of the typical individual and a person belonging to the top 10% was one million pounds in the mid-2000s, but had widened to £1.3 million in inflation-adjusted terms by recent times.
The researcher added: "These gaps are doubly concerning as economic movement in Britain is low – individuals who begin life wealthy tend to stay wealthy, and vice versa."
Comparative Financial Divide
Despite the economic divide expanding in actual numbers, the share of total wealth in the UK owned by the richest households – called "comparative financial divide" – has been "broadly stable since the 1980s," per the analysis.
Throughout these years, overall assets in the UK surged from three times the gross domestic product, to nearly seven and a half times.
Factors of Financial Divide
Referred to as "automatic" appreciation, through rising house prices and variations in retirement fund assessments, were the main drivers of the expanding economic divide from 2010 onward, as stated in the study.
These gains tended to accrue to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Generational Financial Divides
The median economic difference between people in their early 30s and people aged 60-64 increased over twofold in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to 310 thousand pounds.
Area-Based Differences
Furthermore, the study revealed significant geographic differences, with the average level of wealth in the pandemic period standing at 290 thousand pounds in the southeastern region, where property prices have tended to rise rapidly, compared with £110k in the NE of England.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were covered under the government-supported job retention program, and Covid shutdowns curtailed consumption options, the statistics indicate numerous families were capable of accumulating, growing their net worth.
Wealthier families performed significantly better, nevertheless. "The median home in the bottom income bracket saw their available funds rise by merely £80 throughout the health crisis (from 2019 to 2022), roughly identical to the pre-crisis period. On the other hand, the median home in the top income bracket saw their liquid savings rise by £4,200," the report finds.
