UK living standards likely to drop after decisive 2020s decade: Report

LONDON

Living standards across the UK are expected to drop in the coming decade as the country grapples with the consequences of Brexit and the coronavirus pandemic, according to a report by a leading think tank released on Tuesday.

The UK faces “seismic changes” and shifts in its economy and the government must implement policies aimed at tackling the pertinent issues that will shape the decade to come, said The Economy 2030 Inquiry report published by the Resolution Foundation.

“The UK’s recent record of weak productivity, stagnant living standards and high inequality makes a new economic approach desirable. What makes a new approach essential is the scale of coming change,” said Sir Clive Cowdery, the founder of the Resolution Foundation.

“The UK now faces a decisive decade, as the aftermath of COVID-19, Brexit and the net zero transition come together with major shifts in technology and demography. This matters far more than economics. Failing to rise to this challenge risks leaving the nation diminished and divided.”

The report highlighted Italy’s two decades of economic stagnancy and decline, warning that the UK could follow a similar trajectory in the absence of a comprehensive strategy for post-Brexit and post-pandemic economic recovery.

Major changes in the offing

According to the report, the 2020s “look set to be the decisive decade” that will transform the UK for years to come and has made it imperative for the country “to renew its approach to achieving economic success.”

One of the major changes in society and economy has been brought about by the COVID-19 pandemic.

There has been a major shift in working and living styles, as more people are now working from home and more offices have been shuttered.

This has had a negative impact on low-income earners who have been forced to find new jobs, the report said.

“The pandemic has brought far-reaching behavioral change, with a surge in online economic activity and home working. If some of these shifts endure, it could help spread good jobs around the country, but also speed up transitions like the decline of the high street,” read the report.

Brexit will also play a major role in shaping the British economy in the long term, as the loss of free trade and movement with the EU, its main trade partner, will result in higher trade tariffs and a loss of confidence among multinational companies investing in the UK, the report said.

Small businesses across the UK and the EU will stand to lose the most due to customs and trade barriers, it said, adding that the UK will be forced to look for new trade partners, albeit with less beneficial deals than it had as an EU member.

“Brexit too constitutes a huge change for Britain’s economy. As well as utilizing new-found policy freedoms, the UK must wrestle with higher trade costs that saw goods trade with the EU down 14 per cent in the first quarter of 2021, compared with the same quarter in 2020,” the report said.

Technology will continue to change living standards across the UK, while also disrupting employment patterns and cutting many jobs due to increased automation.

The report stressed the need for the UK to introduce technologies that benefit not just consumers, but also employers and workers.

According to the report, British society is swiftly ageing and the UK is set to undergo demographical changes that will inevitably affect society in the long run.

Communities across the UK are ageing at different rates and parts of the UK that are already older are due to age faster than those that are relatively young, it added.

This will certainly affect the economic nature of the UK as it will need to adjust according to the changes within its population.

“The average age of workers has risen from 39 to 43 between 1999 and 2019, materially affecting the nature of economic adjustment: currently, older workers are less likely to change jobs and more likely to see their pay fall if they do so,” read the report.

In order to avoid the negative impacts of these looming changes, the UK will have to devise and implement economic and social policies that stand to benefit the populace in the long term, and not the short term interests of politicians, corporate bosses, and CEOs, the report added.