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What would the neighbours say? How inequality means the UK is poorer than we think

Analysis of OECD figures suggests the poorest fifth of the UK population are the poorest in Western Europe

The poorest fifth of the UK population are significantly worse off than the poorest fifth in other Western European countries, according to analysis of Organisation for Economic Co-operation and Development (OECD) data published by the High Pay Centre think-tank today.

The High Pay Centre examined the ‘OECD Better Life Index’ which estimates the average net disposable household income for the world’s richest economies, as well as the average for the poorest and richest 20% of the population in each country.

In the UK, the poorest fifth of the population have an average income of just $9,530, much lower than the poorest fifth in other North West European countries such as Germany ($13,381), France ($12,653), Denmark ($12, 183) or the Netherlands ($11,274).

In fact, the poorest in the UK are closer to the poorest in former Eastern bloc countries Slovenia and the Czech Republic than to the poor in Western Europe. This is despite the fact that the OECD estimates average incomes in the UK ($25,828) are similar to Denmark ($25,172) and the Netherlands ($25,697). The UK’s average is inflated by the incomes of the top 20% of the population  - at around $54,000, the third highest in the EU. In Belgium, the Netherlands and the Nordic countries, the top 20% make between $44,000 and $49,000.

High Pay Centre Director Deborah Hargreaves said: These figures suggest we need to be more concerned about inequality and how prosperity is shared, as well as average incomes or aggregate measures like GDP. The fact that the rich are richer in the UK than many other countries hides the fact that the poor are poorer.

Most people think our living standards in the UK are similar to economies like France and Germany, but being poor in the UK is more like being poor in the former Soviet Bloc than in Western Europe.

The High Pay Centre analysis also notes that if the UK’s total income of around £1 trillion was divided in the same way as total incomes in Denmark or the Netherlands, 99% of UK households would be better off by around £2,700 per year.

Notes to editors:   

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Posted on 16 June 2014

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