# UK income inequality widens after pandemic dip
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-26
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: UK Income Inequality Hits Three-Year High Despite Pandemic
Meta Description: Discover the latest official figures showing the rise in income inequality in the UK, with median incomes and trends over the decades highlighted.
URL: https://financedigest.com/uk-income-inequality-widens-after-pandemic-diphtml

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By David Milliken

LONDON (Reuters) – British income inequality rose to a three-year high in the 2021/22 financial year after a dip during the coronavirus pandemic, but remains below peaks seen in the run-up to the 2008 financial crisis, official figures showed on Wednesday.

The median British household had after-tax income – including wages, cash benefits and investment income – of 32,300 pounds ($39,800) in the year to the end of March 2022, 0.6% less than the year before after adjusting for inflation.

Median incomes for the poorest fifth of households dropped by 3.8% after [inflation in the 12 months](https://www.financedigest.com/inflation-in-key-german-states-eases-for-second-month.html "Inflation in key German states eases for second month") to the end of March 2022 to 14,500 pounds while those for the richest fifth rose by 1.6% to 66,000 pounds, the Office for National Statistics said.

Inequality dropped during the [pandemic as high earners suffered bigger](https://www.financedigest.com/uk-economy-finally-bigger-than-before-pandemic-in-november.html "UK economy finally bigger than before pandemic in November") percentage drops in earnings, while the poorest benefited from a temporary increase in benefits which was withdrawn in 2021/22.

Most Britons will have faced a bigger squeeze on their incomes during the current financial year, as [consumer price inflation hit](https://www.financedigest.com/uk-consumer-mood-hits-one-year-high-but-financial-gloom-persists.html "UK consumer mood hits one-year high, but financial gloom persists") a 41-year high of 11.1% in October.

Looking at incomes as a whole, including the [effects of direct taxation and the benefits](https://www.financedigest.com/homes-at-marconi-set-to-benefit-from-the-lidl-effect.html "Homes At Marconi Set To Benefit From The Lidl Effect") systems, inequality rose in 2021/22 to its highest since 2018/19 when calculated using the Gini coefficient, a measure widely used by statisticians.

However, it was generally higher in the [second half](https://www.financedigest.com/sofa-sunday-half-of-us-have-lost-our-fitness-mojo-by-the-second-weekend-of-february.html "Sofa Sunday: Half of us have lost our fitness mojo by the second weekend of February") of the 2000s, and peaked in 2007/08.

Income inequality rose fastest in Britain in the 1980s, under the leadership of former Conservative [prime minister](https://www.financedigest.com/economist-odor-picked-as-slovakias-caretaker-prime-minister.html "Economist Odor picked as Slovakia’s caretaker prime minister") Margaret Thatcher, and increased at a slower pace during the 1990s and 2000s, including under Labour governments.

Inequality fell after the global financial crisis, despite subdued growth in median living standards, and was at a 19-year [low in 2016/17 when Britons voted to leave](https://www.financedigest.com/analysis-euros-20-year-low-leaves-ecb-facing-costly-choices.html "Analysis-Euro’s 20-year low leaves ECB facing costly choices") the European Union.

However, the data does not directly capture the wealth impact of surging house prices, which have risen out of reach of many people who do not already own a home, and does not count the benefit from owning a [home outright rather than renting](https://www.financedigest.com/still-living-at-home-a-third-of-the-nation-cant-afford-to-rent.html "Still living at home? A third of the nation can’t afford to rent") or paying a mortgage.

The ONS said the average household used in its calculations comprised 1.8 [adults and 0.5 children](https://www.financedigest.com/nearly-half-of-parents-still-give-pocket-money-to-their-adult-children.html "Nearly half of parents still give pocket money to their adult children").

($1 = 0.8123 pounds)

(Reporting by David Milliken; Editing by William Schomberg)


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