The United Kingdom’s middle class has seen one of the biggest expansions among Western countries over the past two decades but it remains one of the smallest and least wealthy, new analysis by Pew Research Centre has shown.
To qualify as middle class via Pew’s income-based model, a family of four in the UK would need a cumulative disposable income of between just over $29,000 and $87,300 (£19,000 – £57,350 in 2010 rates).
Among Western European countries this the lowest except for Italy’s minimum of $25,000 and Spain’s $24,500.
In comparison, a middle class family of four people in Luxembourg – the country with the richest middle class – would cumulatively have had a minimum of just over $50,000 after tax to spend in 2010, while an individual just over $25,000.
A family of four in the UK would need a cumulative disposable income of just over $29,000 to be defined as middle class.
The study covers the two decades between 1991 and 2010 for Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain, the UK and the US.
But while middle classes shrunk in seven out of the 11 countries, including Italy, Germany and Spain, mirroring a long-term trend in the US, Ireland saw its middle class expand most, followed by the UK.
The think-tank said the expansion was due to a rise in income, although this was not always true for other countries such as Luxembourg and Norway, where a rise in average incomes did not translate in an expansion of the countries’ middle classes.
‘In part, the shift out of the middle class is a sign of economic progress, irrespective of changes in household incomes overall. This is because the outward shift is accompanied by a move up the income ladder, into the upper-income tier, in all countries with a shrinking middle class,’ the report states.
The UK’s middle class remained one of the smallest and least rich in the league in 2010
But it also warned that, as income inequality is related to the size of the middle class in a country, in most countries where the middle classes have shrunk, this was because more people became poorer.
‘At the same time, there is movement down the income ladder in most countries with a shrinking middle class. There was greater overall movement up the income ladder than downward in most countries, resulting in a general improvement in economic status.
‘But there is also a sharpening of economic divisions across households in many Western European countries and in the U.S. as relatively more adults are in the lower- and upper-income tiers and relatively fewer are in the middle.’
UK, Italy, Spain and Ireland have the smallest middle classes in Europe
In Ireland, the middle class share rose from 60 per cent to 69 per cent over the two decades, the biggest increase.
Ireland also saw the biggest rise in average medium income across all classes compared to the other countries.
The UK’s middle class made up 64 per cent of the population in 2010, a rise of 6 per cent over the two decades.
This was accompanied by a decrease in the proportion of people on lower incomes, falling by almost 5 per cent.
However, the UK and Ireland, along with Spain and Italy, still have the smallest middle classes among the European countries, with the exception of the US, where the middle class makes up 59 per cent of the population.
The report also shows that the UK had the biggest share of people on upper-income in Europe at 14 per cent, second only to the US (15 per cent).
Norway, on the other hand, had the smallest proportion of population on upper income at 6 per cent as it also counts the biggest middle class, which makes up 80 per cent of its population.
The Pew said that countries where incomes are more equal have larger shares of middle-income adults, and vice versa, suggesting that countries like Norway and Denmark are more equal than countries like the UK and Italy.
For a UK family of four to be defined on ‘upper income’, it would need to have a cumulative disposable income of around $87,000, compared to Ireland’s $90,000. That is $43,600 for an individual in the UK, compared to $45,000 in Ireland.