UK: UK'S RICH-POOR DIVIDE INDICATES GLOBAL FORCES AT WORK. - It is not only domestic policy that affects patterns of wealth.

Last Updated: 31 Aug 2010

It is not only domestic policy that affects patterns of wealth.

In the light of the latest research from the Joseph Rowntree foundation - illuminating a widening gap between rich and poor - inequality is back on the agenda. While real GDP in the UK has risen by nearly a third since 1979, official surveys show that the poorest 20% of the population are no better off. The gains from economic growth have gone increasingly to those at the top.

A similar picture emerges in the US, where the less well off 60% of the population had almost exactly the same real income in 1993 as they enjoyed 13 years earlier. The fruits of economic growth have been almost wholly confined to the best-off fifth of the population. Similarities in the UK and US approaches to labour markets and taxation during the 1980s no doubt accounts for much of its coincidence.

But with other OECD countries experiencing similar trends, says Schroder Economics, there could also be wider forces at work. Two factors which might well have a bearing are new technology and increasing competition from the emerging world. The former displaces workers, who must seek jobs elsewhere, while the latter depresses the wages of many people in skilled and semi-skilled occupations. Both factors are global trends which are unlikely to reverse of their own accord.

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