Rich-poor divide widens most rapidly in UK
Developed economies are seeing the rich-poor divide widen, according to a report by the Organization for Economic Cooperation and Development (OECD), and the gap is growing most quickly in the UK.
In a statement, the OECD’s Secretary-General Angel Gurria said: “this study dispels the assumptions that the benefits of economic growth will automatically trickle down to the disadvantaged and that the greater inequality fosters greater social mobility”.
Since 1985 the rich-poor gap has grown by around 10 per cent, according to the new data, and the richest 10 per cent of the population have an average income nine times greater than the poorest 10 per cent.
In the UK the income of the top 10 per cent was eight times greater than the bottom ten per cent in 1985, but it was 12 times greater by 2008.
The growth of a financial services elite and the large bonuses paid to bankers has contributed to the income-gap rising so rapidly in Britain according to analysts.
Before the global recession, the top 0.1 per cent of earners in Britain accounted for 5 per cent of total pre-tax income, according to the report, representing a level of wealth at the top of society not seen since World War II.
The trend for the income of the UK’s highest earners to grow more quickly than those lower down the scale is believed to have continued during the downturn, helped by a new top rate of tax.
The Institute for Fiscal Studies has warned that the Chancellor’s plans, outlined last week in the Autumn Statement will contribute to the rich-poor divide.
The poor will be penalised by a freeze on tax credits, and will derive less benefit from a council tax freeze and the postponement of an increase in fuel duty, than higher earners.
The IFS warned that more children will be pushed into poverty by the Treasury’s plans.
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