If Britain is to fix its growth problem, we must deal with the fact that more working-age people must get well – soon
Economic growth is often described in the dry language of statistics: GDP figures, productivity rates and trade balances. But these numbers collectively represent not just the wealth of a nation; they profoundly affect how life feels for all but the most affluent, filtering through into wage growth and thus living standards, affecting tax revenues and so the character of public services and the generosity of the welfare safety net. So the UK’s laggard economic performance in the 15 years since the financial crisis, underpinned by poor productivity growth, matters very much. Together with the economic shocks of Brexit, the pandemic and rising global energy prices, it means real wages are not forecast to return to the levels they were at before the 2008 crisis until 2027: two lost decades for living standards.
Economists have dubbed the UK’s anaemic growth its “productivity puzzle”. There are multiple factors that are probably suppressing growth in the UK more than elsewhere, including low levels of business investment, the self-imposed economic harm of Brexit and a lack of investment in key infrastructure such as transport and broadband. But in turning a spotlight on the nation’s health, the pandemic has forced us to confront the fact that we are an increasingly unwell country, and that is having a significant impact on economic growth.
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