Despite COVID subsiding, British income inequality increased to a three-year high in the 2021/22 fiscal year, according to the recently released official numbers. However, it is still below the heights reached in the years leading up to the 2008 financial crisis.
After accounting for inflation, the median British household’s after-tax income, which includes earnings, cash benefits, and investment income, was 32,300 pounds (USD 39,800) in the year ending in March 2022, which is 0.6% less than 2021.
According to the Office for National Statistics, the median household income for the poorest fifth of households fell by 3.8% after inflation in the year ending in March 2022 to 14,500 pounds, while it increased by 1.6% to 66,000 pounds for the wealthiest fifth.
The pandemic reduced inequality since wealthy earners had greater percentage earnings decreases while the poorest benefited from a brief benefit boost that was eliminated in 2021/22.
Since consumer price inflation reached a 41-year high of 11.1% in October 2022, most Britons would have experienced a more significant strain on their salaries during the current fiscal year.
It peaked in 2007/2008, although it was consistently higher in the second half of the 2000s.
Under the direction of former Conservative Prime Minister Margaret Thatcher, income inequality in Britain grew at the quickest rate in the 1980s. However, it grew more slowly during the 1990s and 2000s, including during the tenures of Labour governments.
Despite the slight rise in the median living standard after the global financial crisis, inequality decreased and was at a 19-year low in 2016–17 when Britons chose to leave the European Union.
The benefit of owning a property outright as opposed to renting or paying a mortgage is not taken into account by the data, nor is the wealth impact of rising housing prices, which are now out of reach for many people who still need to own a home.
The ONS reported that 1.8 adults and 0.5 children living in the typical family it used in its estimates.