Inequality in the UK rose at a greater rate than in any other OECD country leading up to the recession, data from an OECD report revealed on Monday.
The average income of the richest 10 percent of earners in the UK was almost twelve times that of the bottom decile by 2008, up from eight times the bottom 10 percent in 1985 and above the European ratio of nine to one, the report showed.
This was the highest increase of all OECD countries, which brought the UK above the OECD average, data covering the period 1975 to 2008 showed.
Income inequality has risen to a record level over the past 25 to 30 years, although it has increased in both low and high income economies alike, author of the report Michael Forster told journalists at a briefing in London.
The report, which examined earnings in each of the OECD's 34 member countries and took more than two years to compile, based its measurements on the Gini coefficient, where countries are ranked between a figure of zero where everyone earns the same to one where the richest person has all the income.
The UK's figure was just under 0.35 before the financial crisis, higher than the OECD average of 0.316.
This figure was much lower than the United States, Mexico and Chile, which had the highest level of inequality in 2008 at a coefficient of almost 0.5.
The lowest figure was for Slovenia with a coefficient of just over 0.2.
Income inequality has crept up against the backdrop of a period of steady growth in the UK until the financial crisis of 2008.
But Forster said growth was not the reason for an increase in income inequality.
There is no link between growth and income inequality, Forster said, adding there is nothing inevitable it.
A doubling of the share of income the top 1 percent of workers earn, changing work demographics and less redistributive tax benefits were the main reasons for the widening gap, he said.
The top 1 percent of earners increased their share of income from 7.1 percent in 1970 to 14.3 percent in 2005. Prior to the recession, the top 0.1 percent of earners accounted for 5 percent of pre-tax income, while income tax for higher earners declined from 60 percent in the 1980s to 50 percent.
Unlike in other countries the report said the fact that more people were marrying more within their income group in the UK was widening the income gap.
The earnings gap between women with relatively rich and poor husbands increased from 3,900 pounds in 1987 to 10,200 pounds in 2004, the report said.
Taxes were less effective at offsetting the income gap, which fell from 50 percent in the period between the mid 70s and 80s to less than 19 percent to 2008.
Also widening the income gap was an increase in the number of self-employed workers, who earn less than full-time employees on the whole.
But spending on public services in the UK alleviated inequality as the country has relied on it more on it more than other countries.
Spending on services amounts to over 15.4 percent of GDP while spending on cash transfers is some 10 percent. These services reduce inequality more than almost anywhere else, and this impact has increased over the 2000s, the report said.
(editing by Ron Askew)