The global economic crash of 2007 resulted in widening income inequalities in the UK during the years that immediately followed it, according to a new study from the London School of Economics.

The study forms part of the 'Social Policy in a Cold Climate' research project charting developments in a wide range of social issues since 2007.

Key findings

• Over the period 2007–2010, the gap between the lowest-paid and highest-paid workers grew even wider. Median hourly wages fell by 1.6 per cent in real terms, but by nearly 3 per cent for the lowest-paid full-time men and women, and by over 4 per cent for the worst-paid male part-timers. Weekly earnings of the lowest-paid full-timers fell by more than 5 per cent.
• Net incomes after taxes and benefits fell by 2 per cent for those on middle incomes, before allowing for housing costs. Benefit increases in line with inflation insulated some of the poorest households from the recession, and their income had increased before housing costs: but after housing costs their incomes still fell by 2 per cent.
• The poorest Londoners became as much as 24 per cent worse off after housing costs, and the incomes of the poorest people living in the most deprived three-tenths of neighbourhoods nationally declined by more than 10 per cent.
• Children and pensioners were better protected against the recession than other groups. But young adults did comparatively badly: among those in their early 20s, hourly wages fell by 5.5 per cent for men and 5.3 per cent for women; and their net income fell by 16.5 per cent after housing costs.

Source: John Hills, Jack Cunliffe, Ludovica Gambaro and Polina Obolenskaya, Winners and Losers in the Crisis: The Changing Anatomy of Economic Inequality in the UK 2007–2010, Social Policy in Cold Climate Research Report 2, Centre for Analysis of Social Exclusion (London School of Economics)
Link: Report