The 80s were a boom time for many in the city of London and in the financial sector, but for huge swathes of the rest of the UK poverty prevailed, and the gap between the rich and the poor widened hugely, compared to the previous decade.
Now a think tank, the Resolution Foundation, has found that the UK is on course to face the greatest rise of inequality since the days of the Iron Lady.
However, this new wealth gap will not be caused by a 1980s economic boom, but a financial squeeze on the poorest in society.
The think tank says: “A typical family with children is set to have a lower disposable income (after housing costs) in 2020-21 (£18,300 in current prices), than a typical family this year (£18,900).”
They predict a reduction in living standards due to no income growth as we lead up to the 2020 election. Household income growth is now expected to fall to 1.2% this year with a “stagnation” in pay growth biting towards the end of 2017 due to an increase in inflation.
As the UK leaves the EU it is unknown what impact this will have on middle to low income households, but the think tank’s predictions are a stark warning of the bleak future many of the UKs population might face.
Torsten Bell, director of the Resolution Foundation, said: “Britain has enjoyed a welcome mini-boom in living standards in recent years. But that boom is slowing rapidly as inflation rises, productivity flatlines and employment growth slows.
“The squeeze in the wake of the financial crisis tended to hit richer households the most. But this time around it’s low and middle income families with kids who are set to be worst affected.
“This could leave Britain with the worst of both worlds on living standards – the weak income growth of the last parliament and rising inequality from the time Margaret Thatcher was in Downing Street.
“The Prime Minister’s focus on supporting just managing families is absolutely right if we are to avoid the next few years being like the 1980s without the feel-good factor.”