Based on fresh study, the average earner in the UK would require 52 years' worth of salary to attain the financial standing of the most affluent 10% of the population.
Growing Wealth Gap Through the Years
This research examined financial assets information covering the recent health crisis years and determined that in the mid-2000s, it would have needed 38 years of typical employment income to enter the richest segment of the wealth distribution.
An economic expert associated with the analysis stated: "Wealth gaps in Britain are now so large that a average worker saving all their earnings across their entire working life would continue to be incapable to achieve the peak of the wealth ladder."
Measuring the Economic Gap
The study discovered that the gap between the net worth of the average person and someone in the top 10% was £1 million in the mid-2000s, but had widened to £1.3m in real terms by 2020-22.
The researcher added: "These gaps are doubly concerning as financial progression in Britain is limited – those who commence life well-off tend to stay wealthy, and the opposite holds true."
Comparative Financial Divide
Even with the wealth gap expanding in actual numbers, the portion of complete net worth in the UK owned by the richest households – known as "comparative financial divide" – has been "broadly stable since the 1980s," as stated in the study.
During this period, overall assets in the UK rose substantially from three times the annual GDP, to nearly seven and a half times.
Factors of Financial Divide
Referred to as "passive" appreciation, via increasing property values and adjustments to pension valuations, were the primary factors of the widening wealth gap from 2010 onward, per the report.
These appreciations generally flowed to elderly homeowners, the research shows – worsening the age-based economic gap.
Intergenerational Economic Gaps
The average wealth gap between individuals aged 30-34 and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135k in the mid-2000s, to 310 thousand pounds.
Geographic Differences
There were also stark area-based disparities, with the median value of wealth in 2020-22 amounting to £290,000 in the SE of England, where real estate values have tended to rise rapidly, as opposed to 110 thousand pounds in the north-east.
Pandemic Period Consequences
During the pandemic, when millions of workers were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the statistics indicate numerous families were able to save, increasing their wealth.
Wealthier families performed significantly better, however. "The typical family in the poorest fifth saw their liquid savings increase by just £80 throughout the health crisis (across the pandemic timeframe), broadly the same as the 24 months before COVID. Conversely, the median home in the highest income quintile saw their cash reserves increase by £4,200," the study reveals.
