A major new report into rising inequality warned that the growing gap between rich and poor is now a threat to Western democracy

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  • Inequality is rising in the UK and the US according to a new study by the Institute for Fiscal Studies.
  • The report warns that the growing gap between rich and poor risks undermining faith in democracy.
  • Low earners in the UK have seen their wages stagnate as health and educational inequalities deepen.
  • It suggests the rise in populist and fringe movements in the West is a direct result of the widening gap.
  • Visit Business Insider's home page for more stories.

LONDON - The deepening divide between the rich and poor in Western countries is posing "a threat not just to capitalism but also to our democratic system," according to a new study into the impact of growing inequality in the UK.

The study, which is being led by Sir Angus Deaton at the Institute for Fiscal Studies think tank, suggests that rising inequality is harming the UK and other major Western economies.

The IFS' initial report, released on Tuesday, finds that low-earners have seen their wages stagnate in recent decades, with widening gaps between the rich and poor undermining public belief in democracy and the capitalist system.

It points to figures showing the average CEO of a FTSE 100 company now earns 145 times the average UK salary, up from just 47 times in 1998.

The study's authors will now look at the resultant rise in populist movements in the West and what can be done to reverse the growth in inequality in the UK.

Here are some of their key findings so far.

US and UK lead the inequality league table

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Initial findings suggest that inequality in the UK is at an international high, with only the US at a higher level among major economies.

Wages of low earners are stagnating

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The study also finds that low earners in the UK have seen their wages stagnate in real-terms over recent decades as higher earners have seen theirs steadily grow.

Mortality rates are on the rise

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The growth in inequality has led to an increased mortality rate for middle-aged citizens in the UK, the study suggests, as the growth in "deaths of despair," such as suicides, create the first increase in deaths for decades.

The life-expectancy gap is growing

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The study also found that the gap in life-expectancy between poorer and richer citizens is growing. At the start of the century women born in the 10% most affluent areas in the UK could expect to live 6.1 years longer than those in the 10% least affluent areas. By 2016 that gap had widened to 7.9 years.

Educational inequality is growing

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The study also found that the social inequality between those who have been educated at university and those who have not is widening in Britain. People without degrees are now 10% more likely not to be living with a partner in their middle age than those who have them.

Responding to the Institute for Fiscal Studies Deaton Review of inequalities, Labour's Shadow Chancellor John McDonnell said: "With inequality tearing apart the fabric of our society, I'm delighted it's finally beginning to get the attention it deserves.

"Sir Angus is right to highlight the problems of stagnant wages and regional inequality as well as the importance of trade unions for addressing inequality."

Business Insider contacted a UK government spokesperson for a response to the report's findings.


Got a tip? Email this reporter at abienkov@businessinsider.com, or send them a direct message on Twitter at @AdamBienkov

This story is part of Business Insider's series on inequality in Britain.

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