The Scale of Economic Inequality in the UK
UK Income Inequality
The UK has a very high level of income inequality compared to other developed countries.
Households in the bottom 10% of the population have on average a disposable (or net) income of £9,644 (this includes wages and cash benefits, and is after direct taxes like income tax and council tax, but not indirect taxes like VAT). The top 10% have net incomes almost nine times that (£83,875). As can be seen from the graph, income inequality is much starker at the top of the income scale, with the group with the 9th highest incomes making only 61% of the top 10%’s income.
Inequality is much higher amongst original incomes than disposable incomes with the poorest 10% having on average an original income of £4,436 whilst the top 10% have an original income 24 times larger (£107,937)1.
Differences Within the Top 1%
The graph above does not show the full extent of the difference between the richest and the rest of society. This is because the top 1% have incomes substantially higher than the rest of those in the top 10%. In 2012, the top 1% had an average income of £253,927 and the top 0.1% had an average income of £919,8823.
How Income is Shared
The graph below shows how income is shared amongst households. The poorest fifth of society have only 8% of the total income, whereas the top fifth have 40%.
Income Spread Between the UK’s Regions and Nations
Income is also spread unequally across the UK’s regions and nations. The average household income in London is considerably higher than in the North East.
GB Wealth Inequality
Wealth in Great Britain is even more unequally divided than income. The richest 10% of households hold 45% of all wealth. The poorest 50%, by contrast, own just 8.7%.6
Wealth Spread Between Great Britain's Regions and Nations
Wealth is also unevenly spread across Great Britain. An average household in the South East has almost twice (183%) the amount of wealth of an average household in Scotland7.
How Does the UK Compare to Other Countries?
The UK's wealth distribution is roughly average compared to the other OECD countries. The UK has a wealth GINI coefficient of 73.2% compared to an OECD average of 72.8%.
Compared to other developed countries the UK has a very unequal distribution of income. Out of the 30 OECD countries in the LIS data set, the UK is the seventh most unequal, and within this data set it is the fourth most unequal in Europe9.