Back to the Future: UK Living Standards Not Immune From 80s Nostalgia Trend

The Resolution Foundation warns a quartet of rising inflation, produced by the collapsing value of the pound post-Brexit, falling wages, stagnant or negative jobs growth and savage scheduled budget cuts would hit the least well-off hardest. This will make the current parliament not only the worst for living standards for the poorest half of UK households since records began in the mid-1960s, but the worst since the early years of Thatcher's 1979-90 premiership for inequality.

John Hood, a spokesperson for The Equality Trust, explained that inequality in the UK steadily fell from 1938 to the early 1970s.

"There was a large fall in income inequality during WWII, and over the following decades there was a continued, although less steep, fall. During the 1970s and 1980s inequality saw a dramatic rise. From 1990 until the financial crisis, inequality remained relatively stable — but following the financial crisis there was a short, sharp fall and a slow decrease in the following period. This has brought inequality back to the level it was in the mid 1980s," Hood told Sputnik.

In world terms, Hood said the UK is the 7th most unequal out of the 30 OECD countries. The UK is "substantially" more equal than the USA too, which is more unequal than the UK has been in any time in recent decades.

"Comparing the UK to other European countries finds us with slightly above average inequality. The UK is less unequal than many Eastern and Southern European countries, but more unequal than all the Nordic countries and much of the rest of Europe," Hood added.

Now, the Resolution Foundation forecasts that between 2015 and 2020, incomes for the poorest half of households will fall by 2%. It bases its projections on the assumption incomes will fall for the poorer half of households during this period, but will rise by around 5% for the richest fifth.

Overall, the Foundation foresees inequality rising to record highs by 2020 based on three separate measures — the 90:10 income ratio (the income of a household 90% up the income distribution scale, divided by that of a household only 10% of the way up), 80:20 ratio (calculated in a similar way, with adjusted figures), and Palma ratio (the income share of the top 10% divided by the income share of the bottom 40%).

The Foundation even suggests its projections could be overly optimistic, as the impact of Britain seceding from the European Union was not factored in, beyond inflation considerations.

"The vote to leave the European Union does not thus far appear to have impacted on the macroeconomy or employment, although it has hastened the end of ultra-low inflation and increased how far it is likely to rise in the next few years. Of course, our projection could also be wrong in a positive sense — if the government is serious about facilitating the creation of new jobs, and unemployment falls as a result, the negative impacts of the issues we highlight could be offset," Stephen Clarke, research and policy analyst at the Resolution Foundation told Sputnik.

However, Clarke is also concerned about the ongoing economic stagnation of UK regions.

"There are serious regional imbalances in the country, particularly between South East England, the wealthiest region, and the rest of the country. Incomes are typically 10 percent lower outside the South East, North East England, the West Midlands and Northern Ireland are 20 percent lower — and these gaps haven't narrowed in 20 years. By contrast, Scotland has been steadily catching up," Clarke concluded.

Commenting on the findings, shadow chancellor John McDonnell said:

"It is becoming clearer by the day that working families will be forced to pay for a Tory Brexit that favours the rich and not the rest of us, as our country faces its biggest rise in inequality since Margaret Thatcher."