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Income gap widens

The 1980s and 1990s were a time of conspicuous wealth and economic growth.

However, not all benefited from the prosperity. By most measures the gap between rich and poor grew as unemployment topped 3m and taxes on the wealthiest people were cut.

At the same time, the Thatcher and Major governments reformed the welfare state and kept benefits to a minimum. The aim was to cut costs and to encourage people into work.

It was argued that through improving the flexibility of the UK labour market, economic growth could be secured.

However, moves such as ending the link between the state pension and average earnings led to an increase in pensioner poverty. And analysts identified the rise of a poor underclass in UK society.

Graph comparing the rates of growth in income among different levels of income earner in the UK between 1979 and 1990 A man with an early-style mobile phone
The boom times in the 1980s spawned the era of the yuppie
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