Personal Finance

UK ‘one of the most unequal countries in the western world’

Growing wealth inequality has made the UK economy one of the most unequal in the western world and is increasing relative poverty rates, according to Oxfam.

Based on its analysis of data compiled by the investment bank Credit Suisse, the charity claims that 634,000 of the UK’s richest people are worth 20 times as much as the poorest 13 million combined, The Guardian reports.

It says that the top ten per cent of the population own more than half of all the UK’s accumulated property, pension and investment wealth, with 23 per cent owned by the top one per cent. In contrast, the poorest 20 per cent of the UK own just 0.8 per cent of its aggregate wealth.

Oxfam goes on to claim that a paper to be published later this year, in collaboration with the London School of Economics, will provide “empirical evidence that poverty rates tend to be higher when inequality is higher”, says Tim Worstall in Forbes.

The anti-poverty group says that the stark wealth divide in the UK was partly to blame for the shock Brexit vote in June, with “people expressing distrust and disconnection with political processes and voting for change in the hope that it would improve their economic position”.

Not everyone is especially concerned, or even surprised, by the findings. Worstall himself describes the paper as an example of “monstrous idiocy” that merely reflects the “natural order of things”.

He claims that the typical wealth distribution of an advanced economy includes about 50 per cent being held by the top 10 per cent – and that there is a “lifetime” effect that means most young people are actually in negative wealth, but that as they get older and buy property or save into a pension they get richer.

He also points out that as the UK’s measure of poverty is relative, reflecting those people with an income of less than 60 per cent of the national median, Oxfam’s upcoming report will simply show that “increases in inequality increase inequality”.

Oxfam has welcomed Prime Minister Theresa May’s focus on corporate excess and called on her government to reform taxes to ensure the rich pay their fair share and the government acts to curb excessive executive pay. Oxfam is also calling for an increase in funding for skills and training, and a greater representation for workers on boards.

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