Falling into the wealth gap trap

Posted by Mike O'Brien on February 28, 2025 in Postcards from the digital frontier | Leave a comment

At its core, marketing is about demand – what people want, need, and are willing to spend their money on. Yet, as we stand on the precipice of deepening economic inequality, demand itself is under threat.

According to the Joseph Rowntree Foundation, as of 2025, more than 1 in 5 people (21%) in the UK are living in poverty, totalling 14.3 million individuals. This trend is only likely to accelerate, bringing with it severe economic, social, and democratic consequences – not to mention global repercussions. The Wealth Gap Rising Register from the Fairness Foundation provides compelling evidence that wealth inequality is also making it harder to reach net zero and tackle climate change effectively. When wealth is concentrated in the hands of a few, investments that prioritise sustainability and long-term public good often take a backseat to short-term profit motives.

What Starts in the US Sets the Tone for the UK

The UK has long followed the economic and social trends set by the United States. What happens in America today – whether in politics, business, or culture – inevitably filters through to British society. And right now, the economic landscape of the United States is a warning sign for the UK. While billionaires secure tax breaks, offshore their wealth, and enjoy corporate bailouts, ordinary Americans are struggling with the basics – healthcare, housing, and job security. These essential safety nets are being targeted by billionaires and corporate lobbyists who believe they deserve even more of the world’s riches. We are seeing the same trends unfold in the UK: rising inequality, stagnant wages, and an increasing reliance on insecure work contracts, while vested interests seek to sell off/acquire national assets.

There is a useful myth that the wealthy create jobs. The truth is that economic growth is driven by consumer spending. When ordinary people have money in their pockets, businesses thrive. This was a lesson Henry Ford understood when he raised wages for his workers – not out of charity, but because he wanted them to be able to afford the cars they were producing. That is how sustainable economies function.

Yet today, in both the US and UK, we see policies that actively restrict consumer spending power. Wages remain stagnant, while the cost of living surges. The rise of monopolistic corporations acquiring intellectual properties and dumping workforce has destroyed real competition, leading to increased prices and fewer choices. We’ve seen vast numbers of marketers sacked in recent months because of super-mergers. The government, rather than stepping in to level the playing field, is often complicit – either through inaction or through policies that favour corporate interests over public welfare.

The UK’s Wealth Gap, Life Expectancy, and the Death of the Middle Class

If we focus specifically on the UK, the economic landscape is increasingly bleak. While wealth and income inequality are undeniable, and millions live on zero-hours contracts with no job security, the situation requires some nuance.

Economic Pressures: Middle-income households are experiencing declining living standards due to stagnant wages and rising costs of living. This has led to increased financial insecurity, with many struggling to save or maintain a decent standard of living

Job Insecurity: The “precarious middle” is characterized by increased job insecurity, with more middle-income individuals in insecure work arrangements. This includes single parents and singles without children, who are more likely to be in insecure jobs

Housing Costs: Middle-income households, particularly private tenants, face unaffordable housing costs, which further erodes their financial stability. Rising interest rates could exacerbate this issue by increasing mortgage costs.

Savings and Debt: The pressure to save for emergencies and retirement, combined with high housing costs and student loan repayments, leaves many middle-income households with insufficient income for a comfortable living standard.

Wealth Concentration: The UK’s wealth gap has grown significantly, with wealth becoming more concentrated among a smaller group of people. Between 2011 and 2019, the wealth gap increased by 50%, with those in the top 10% of households accumulating substantial wealth while the poorest households often have no wealth and may be in debt. Income inequality is also substantial, with the top fifth of households taking a disproportionately large share of the country’s income, as reflected in the high Gini coefficient.

Zero-Hours Contracts: These contracts have become increasingly prevalent, with over 1 million people in the UK employed under such terms as of 2024. While some workers value the flexibility, the majority face severe insecurity, lacking access to regular income and workers’ rights. Young workers and those in part-time employment are disproportionately affected, highlighting structural issues within the labour market. While Labour plans to ban zero-hours contracts that are deemed exploitative, they have moved away from an outright ban on all such contracts. The focus is on ensuring workers have a baseline level of security and predictability in their employment arrangements. What a waste of a majority.

Life Expectancy: The UK has experienced a slowdown in life expectancy improvement since 2010, a trend exacerbated by the COVID-19 pandemic, which caused a sharp decline in 2020. While projections suggest a gradual increase, the rate of improvement remains significantly slower than in other high-income nations. Among G7 economies, the UK ranks second worst for life expectancy – a stark indicator of systemic failures in public health and economic inequality.

Social Mobility: The UK’s social mobility crisis is well-documented. Socioeconomic barriers remain deeply entrenched, with those born into disadvantaged backgrounds facing substantial obstacles to improving their circumstances. While policies such as the “Levelling Up” White Paper and the Social Mobility Pledge aim to address regional disparities, real change remains elusive. In many ways, social mobility has stagnated, with opportunities largely concentrated in London and the Home Counties while the North and other remote regions continue to struggle.

Economic Growth: Forecasts for UK economic growth in 2025 range from 1.2% to 1.7%, with household consumption and government spending acting as primary drivers. However, concerns about inflation, trade frictions, and labour market uncertainties persist, making long-term stability uncertain. The economy may not be collapsing, but its trajectory leaves many vulnerable to stagnation and growing inequality.

This shift is visible in consumer behaviour. As marketing professionals, we have seen a significant decline in discretionary spending. Consumers are being forced to prioritise essentials – rent, food, energy bills – leaving little room for non-essential purchases. Brands that once thrived on a burgeoning middle class are now struggling.

This is not just bad for business; it is bad for democracy. When people feel economically powerless, they become politically disillusioned. And this disillusionment is being exploited by populist leaders who offer easy scapegoats rather than real solutions.

The Political Fallout: Manufactured Anger and Economic Despair

The growing wealth divide is not just an economic issue – it is a political one. In the United States, working-class voters are increasingly drawn to Donald Trump’s rhetoric, believing he will fight for their interests. In the UK, we see a similar trend with the rise of Reform UK. Both movements tap into genuine frustration, but they misdirect it towards cultural battles rather than addressing the real economic injustices.

The truth is anger and anxiety are being weaponised. People are struggling, but rather than challenging the economic system that exploits them, they are encouraged to blame immigrants, minorities, or the so-called “liberal elite.” It is a distraction – one that allows those truly responsible for economic inequality to continue hoarding wealth and power. (I will explore the role of social media and political marketing in another blog.)

The Future of Consumer Spending – and Society

As marketers, we understand the power of perception. But perception alone cannot override economic reality. If people do not have money to spend, businesses suffer. If businesses suffer, jobs disappear. If jobs disappear, economic growth stagnates. And when economic growth stagnates, society fractures.

The UK must decide whether it wants to follow the path of the United States, where corporate interests dictate policy and workers are left behind, or whether it wants to chart a different course – one where economic policies are designed to strengthen the middle class, where monopolies are broken up to encourage real competition, and where wages rise in line with the cost of living.

If we do not act, we will continue descending into a world where the rich set the rules, the poor pay the price, and consumer spending – once the driving force of our economy – becomes a thing of the past. The choice is ours to make.

A deep dive podcast on the above article by Ai – my thanks to Larry and Mandy at Notebook LM