Per recent research, the typical earner in the UK would have to work 52 years' worth of income to attain the financial standing of the most affluent 10% nationwide.
Widening Financial Divide Across Decades
The study analyzed net worth data including the Covid pandemic period and determined that during the pre-financial crisis era, it would have taken nearly four decades of median full-time earnings to enter the top 10th of the wealth distribution.
A senior economist associated with the study observed: "Economic disparities in Britain are now so large that a average worker saving all their earnings throughout their career would continue to be incapable to achieve the peak of the wealth ladder."
Measuring the Wealth Divide
The research found that the disparity between the assets of the typical individual and someone in the richest segment was £1m in the mid-2000s, but had increased to £1.3 million in inflation-adjusted terms by the pandemic years.
The analyst added: "These gaps are especially alarming as economic movement in Britain is low – people that start life well-off tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Even with the wealth gap expanding in actual numbers, the share of total wealth in the UK possessed by the most affluent homes – called "comparative financial divide" – has been "mostly consistent since the 1980s era," according to the study.
Throughout these years, total wealth in the UK increased dramatically from triple the gross domestic product, to almost 7.5 times.
Drivers of Financial Divide
Referred to as "automatic" appreciation, by means of rising house prices and changes in retirement fund assessments, were the primary factors of the growing financial disparity since 2010, per the study.
These gains tended to accrue to elderly homeowners, the study demonstrates – exacerbating the intergenerational wealth divide.
Intergenerational Wealth Disparities
The average wealth gap between thirty-somethings and people aged 60-64 increased over twofold in inflation-adjusted terms, from £135,000 in 2006-08, to £310k.
Geographic Disparities
Furthermore, the study revealed pronounced regional variations, with the average level of net worth in 2020-22 standing at 290 thousand pounds in the southeastern region, where property prices have tended to rise rapidly, versus £110k in the north-east.
Health Crisis Years Consequences
Amid the health crisis, when numerous employees were supported by the taxpayer-backed furlough scheme, and Covid shutdowns curtailed consumption options, the information reveals numerous families were in a position to set aside money, growing their net worth.
More affluent homes fared much better, though. "The typical family in the poorest fifth saw their cash reserves increase by just £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the pre-crisis period. On the other hand, the average household in the wealthiest fifth saw their available funds grow by 4,200 pounds," the report finds.
