/ world today news/ Britain risks mirroring Italy’s economic problems unless it develops a strategy to deal with the five seismic shifts that will shape a decisive decade for the country, a report warns.
A joint project by the Solution Foundation think tank and the London School of Economics has said Britain is neither used to nor prepared for the challenges posed by Covid-19, Brexit, the net zero transition, automation and changing demographics.
Announcing the launch of their Economy 2030 study, the two organizations said that messing around without a proper plan would be detrimental to the living standards of the island’s people and the economy as a whole.
The launch report notes that Italy has experienced two decades of declining living standards and, in the absence of a comprehensive economic renewal strategy, there is a risk that the UK will face a similar relative decline.
Sir Clive Cowdery, founder and co-chair of the Resolution Foundation’s Economy 2030 project, said:
“Britain’s recent record of poor productivity, stagnant living standards and high inequality makes a new economic approach desirable.”
“What makes a new approach essential is the scale of the changes ahead,” says Sir Cowdery.
“The UK now faces a decisive decade as the effects of Covid-19, Brexit and the net zero transition combine with major changes in technology and demographics,” he notes.
“This matters far more than the economy. Failure to address this challenge risks leaving the nation diminished and divided,” said Sir Cowdery.
The report says the 2020s will shape the UK’s fate for decades to come, with changes including:
Covid-19: More homework as a result of the pandemic will mean more lifestyle choices for professionals, but it will force people on lower incomes to find new jobs in new places.
Brexit: The UK will be able to use new political freedoms, but will also have to deal with the higher costs of doing business with the European Union, its main trading partner.
Net zero: Dehydrogenation will provide economic opportunities, but action must be urgent. The UK needs to go from installing almost zero heat pumps every year to installing 3,000 every day by 2030.
Technologies: The arrival of new technologies will raise but also erode living standards, with the Organization for Economic Co-operation and Development estimating that one in seven jobs could disappear as a result of automation in the next 15-20 years.
Demographics: The ratio of people aged under 20 or over 65 to those aged 20-64 is likely to increase from 72 per 100 to 79 per 100 between 2020 and 2030 – a faster projected change than in any other decade in the first half of the 21st century.
The report said that while the government had pledged to “build anew and better”, “equalise” and embrace a “global Britain”, neither it nor any major political party had an economic plan to achieve these high-level goals.
“Any such strategy was notably absent from last week’s Queen’s Speech,” the report added.
The UK needs to improve on the results of the 2010s, a decade which saw the weakest job mobility since the 1930s, the worst productivity performance in 120 years and the worst inequality of any country from the European Union, except Bulgaria, the report says.
Without improvement, the authors write, Britain will have per capita incomes closer to Italy than to Germany by the end of the decade.
Minush Shafiq, director of the London School of Economics and co-chair of the project, said:
“The decade ahead will be a decisive one for the UK. New trade relationships, the digital revolution and net zero will fundamentally change our economy and society.”
“We need to rethink our economic strategy to meet these challenges and ensure we create a society where everyone can thrive,” he said.
Translation: SM
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