LONDON (Reuters) - The gap between top and mid-range earners in Britain is likely to widen, with the biggest pay differences currently to be found in the financial sector and in London, a think tank said on Tuesday.
The findings come as protesters inspired by "Occupy" protests around the world continue to camp near the London Stock Exchange besides St Paul's Cathedral to demand greater wealth equality and financial reform.
"The research shows that if you want to do something about rebalancing inequality you have to take on the financial sector, and that what we're seeing in the Occupy protests," said Jonathan Portes, director of the National Institute for Economic and Social Research (NIESR).
"The financial sector has taken a disproportionate share of economic growth, and it is not surprising that we are seeing such popular discontent," Portes added.
Bankers rescued by the taxpayer in the 2008-2009 financial crisis have taken much of blame for triggering an economic slowdown that has squeezed Britons' living standards, with sluggish wage growth lagging behind inflation.
Spending cuts planned by the 19-month-old Conservative-led coalition to tackle Britain's budget deficit will further boost the gap between the richest and poorest, the think tank said in a report.
"The prospect of income inequality is likely to rise again, driven both by structural change and governmental policies," Portes said.
The very highest earners have seen the fastest growth in their wages, with the top 1 percent's pay packet growing 68 percent faster than that of the median earner from 1977 to 2002, the NIESR said.
The median earner is the person in the middle of the wages range, with half of people earning more than him or her and half earning less.
The trend was more pronounced the higher the earnings were, with the top 0.5 percent growing 84 percent faster than the median over the same period.
The calculations were based on weekly earnings and would have been higher if they had included annual bonuses.
(Editing by Tim Castle)