The UK has one of the highest levels of income inequality in Europe, with a sharp and sustained increase in all measures of economic inequality over the course of the 1980s. According to the Gini Coefficient, income inequality has stayed relatively flat since 2000, but other measures tell a different story. 

The income gaps between richer and poorer households have been increasing in absolute terms, even if measures of relative inequality have remained stable. You can measure relative inequality itself in different ways. If we focus on the poorest 20% of households, for example, we see that incomes for this group are now no higher than they were 15 years ago, while the average household has seen its income rise 9% over this period.

The Gini coefficient hides the "runaway rise" of the richest 1%, who now take 8% of all national income (compared to 3% in 1970 and 6% in 1990). Changing the way we measure income, by factoring in housing costs or income from capital gains or inheritance, can reveal a widening disparity even over the past decade.

Wealth is far more unevenly distributed than income. From 2016 to 2018, the wealthiest 12% of households owned half of the UK�۪s wealth, while the least wealthy 30% of households held 2%. In the past decade, the wealth gap has increased. The wealthiest 10% hold �2.5m more in wealth per household than the least wealthy, a significant increase from the �1.5m gap in 2006 to 2008.

For the most part, income and wealth are tightly linked, meaning that the households most exposed to income shocks often do not have savings to fall back on. This goes some way to explain the increase in low income households turning to debt to cover essential needs - rent, food, utility bills - over the past decade.

High levels of government spending on research and development for new medicines will not always lead to affordable and effective treatments.  

It is widely argued that the business models and market structures of the global pharmaceutical industry do not prioritise treating chronic conditions over developing novel drugs. 

This means that prohibitive prices of medicines produced can place a strain on health service budgets, particularly in low-income countries.  

The lack of focus on new drug development also plays a role in the growing threat of antibiotic resistance. This is made worse by the overuse of antibiotics in many countries and in animal agriculture.

The global spread of the Covid-19 pandemic has highlighted the interconnected nature of today’s world. But the international response has not been equal, with huge differences in the capacities of high income and low income countries to control the spread of the coronavirus and to pay for vaccination programmes. The disparities have highlighted the need for a stronger system of international cooperation and equity, not just in the health field but across a range of issues.

Many of the world’s most pressing problems cannot be solved by national action alone. They include global poverty and security; climate change; the protection of the oceans; and the regulation and taxation of transnational corporations operating across national boundaries. The 17 Sustainable Development Goals, adopted at the United Nations in 2015, embody the international community’s economic, social and environmental priorities.

Over recent years international cooperation has been in decline, particularly in multilateral fora such as the United Nations and the G20. The return of great power rivalries, particularly between the US and China, along with the impact of economic weakness and Brexit on the unity and reputation of the European Union, have led to a fracturing of international relations. The UK government, for its part, has declared a new post-Brexit vision of a ‘Global Britain’, but what this should mean is not always clear.

In this context a wide range of voices have been calling for a revival of international and multilateral cooperation and for a new, positive role for the UK.  

Taxes on finance, currencies and banking can serve a number of important purposes. They can reduce volatility in markets and reduce excessive speculative activity.

They guide towards or against particular types of financial activity ��� for example discouraging high risk parts of the industry that serve little direct social purpose, like high-frequency trading. They can also raise revenues that can be spent by the state on delivering wider economic objectives, such as a more inclusive finance system and funding the net-zero transition.

This is particularly relevant in the aftermath of an economic crisis such as that triggered by Covid-19, where the state has needed to act to prevent or minimise financial collapses.

The pandemic has put poorer households under great financial strain. On average, low and high income households have seen similar proportionate falls in income - but this does not mean that the pain has been equally shared. While richer households can cut back on non-essential spending and fall back on their savings, poorer households are unable to do so. Over half of adults in the poorest 20% of families have had to borrow to fund basic costs such as food or housing.

Unless action is taken, the unequal economic impact of Covid-19 will be felt well into the future. Job losses have been concentrated in the poorest households, threatening a longer-term divergence in employment chances. Many of the richest households have been able to build up their savings over the course of the crisis, further widening the gap between them and the increasingly economically insecure poor. They will use these increased savings to buy assets. Even as the economy has tanked, asset markets have remained reasonably buoyant. This divergence can in part be explained by the wealth gap because the asset-owning class has been least affected by the crisis and in part because of policy decisions that protect financial markets, even at the expense of the real economy. 

Poorer households have also seen far worse health outcomes than the well-off. In part, this is because they are less likely to be able to work from home and are therefore more exposed to the virus. It is no small irony that the UK’s “key workers” earn, on average, 8% less than the median wage, reflecting in part the freeze on public sector pay under austerity and persistently low pay in sectors such as social care. At the same time, the UK’s high levels of economic inequality have given rise to wide health inequalities, which the Marmot Review found to have widened since 2010. One consequence of this is that the Covid-19 death rate in the most deprived parts of the country is double that of the most well-off.

Even before Covid-19, the multiple crises experienced by western economies over the last decade and more – the financial crash, the climate emergency and rising inequality – have led some commentators to ask whether a new ‘economic paradigm’ may be in the making.

An economic paradigm is the framework of economic theories, policies and narratives which come to define a particular era. In the 20th century two major periods of economic crisis led to changes in the dominant paradigm. Old economic orthodoxies proved unable to provide solutions, and new economic theories and policies took their place.

In the 1940s, following the Wall Street crash of 1929 and the Great Depression of the 1930s, Keynesian economics replaced the previous orthodoxy of ‘laissez faire’, leading to the ‘post-war consensus’ of full employment and the welfare state. In the 1980s, following the economic crises of the 1970s, free market economics became the new orthodoxy. But free market economics seems to have caused the crises we have recently experienced, and to offer little by way of solutions. Is another ‘paradigm shift’ due?

In the quarter of a century since 1996, UK house prices have risen 161%: from around 4.5 times average household income then to around 8 times now. In 2018 renters spent 33% of their household income on rent, rising to 40% in London.

Affordability is a nationwide problem, with rural areas having a higher ‘affordability gap’ than urban areas. It is particularly acute in England, where in 2017 new build homes were unaffordable to 84% of renting families.

Unaffordable housing is linked to a sharp fall in home ownership, especially among young people and families with children, and to an increase in homelessness. Prior to the pandemic, the number of rough sleepers had more than doubled since 2010.

It is now estimated that more than 8m people in England – around 1 in 7 – are living in an unaffordable, insecure or unsuitable home. A range of different types and tenure of housing are needed – not just homes to buy, but better and more affordable social and privately-rented accommodation.

People born outside the UK make up an estimated 14% of the UK’s population, or 9.5 million people, and just over half of BME residents of the UK were born overseas. Tackling racial inequality is therefore closely connected to improving the economic position of migrants to the UK. Discriminatory practices can particularly affect migrants, and public attitudes to immigration have impacts on the wider BME community.  

Covid-19 has highlighted both the positive contribution migrants make to society and the challenges they face. Migrants are disproportionately likely to work in 'key worker' jobs. Notably, around 20% of care workers are foreign nationals, the majority from outside the EU. Many of these roles are low paid.

Migrants often have restricted access to public services and financial support. Many effectively pay twice for NHS care, required to pay an NHS surcharge as well as their taxes. They face significant barriers to care despite their disproportionate contribution to the UK's health and care systems.

A key component of new economic thinking has been around the issue of economic growth. Critics of orthodox economic theory and policy have argued that the overwhelming focus on achieving growth of GDP is at the root of our environmental and social crises. Current patterns of economic growth are environmentally unsustainable and do not generate individual or social wellbeing.

These critics seek to replace GDP as the principal measure of an economy’s success. Most seek to define a broader goal of ‘wellbeing’, and alternative indicators to measure it. A number of international institutions have adopted the goal of ‘green growth’ or ‘inclusive growth’, often within the overall framework of ‘sustainable development’.

A more radical critique argues for ‘degrowth’: that environmental sustainability demands an overall contraction of production and consumption in western economies. Others propose the ideas of ‘post-growth’ or ‘beyond growth’, arguing for a direct focus of policy on the achievement of environmental and social objectives.

The introduction of Universal Credit in 2013 replaced a number of separate working-age benefit schemes. The stated aim was to simplify the system and to avoid a 'cliff edge' whereby recipients would lose money if they found work - 'making work pay' and smoothing moves in and out of the labour market.

Since then, Universal Credit has been widely criticised, both before and during the pandemic. Targets for criticism include its bureaucracy, its low rates, the 'two child' limit for child support, the delay in receiving the first payment, the harsh nature of its sanctions, and the distribution of benefits at a household, not individual, level - which increases the risk of financial abuse, especially for women.

While some argue for reforms to Universal Credit to address these issues, others call for it to be scrapped altogether due to objections to its core principles (e.g. conditionality and means-testing). One far-reaching reform would be the establishment of a 'Minimum Income Guarantee' - which would set a ‘living income’ floor below which no household would fall and could be implemented within the Universal Credit system.

NB Some households are still on the ‘legacy’ system of benefits. The Government expects all households to have ‘migrated’ to Universal Credit by September 2024.