The UK risks falling further behind its competitors and ending the 2020s “diminished and divided”, leading researchers warned on Tuesday, as they launched an inquiry into what they dubbed a “decisive decade” for the British economy.
While most advanced economies need to address the planned move to net zero carbon emissions, the repercussions of the coronavirus crisis and rapid technological change, the UK also has particular Brexit challenges and a difficult demographic problem in the 2020s, said the researchers at the Resolution Foundation think-tank and the London School of Economics, part of the University of London.
“The Economy 2030 Inquiry” by the Resolution Foundation and the LSE will seek to recommend the best policies to prevent the UK becoming the sick man of Europe. The work will be overseen by seven commissioners from academia, business and trade unions.
Warning of the risk for Britain of an “Italian-style” economic decline, the Resolution Foundation said: “If the UK’s pace of underperformance relative to Germany continues at the same pace in the 2020s, then it will end this decade with gross domestic product per capita much closer to that of Italy than Germany.”
The aim of the inquiry, funded by the Nuffield Foundation, a charitable trust, is to look at the broader challenges facing the UK economy rather than the day-to-day recovery from Covid-19.
It will seek to provoke what Torsten Bell, director of the Resolution Foundation, called “an honest conversation”.
The launch report for the inquiry accused the government of ignoring “the very real trade-offs we face as the UK adapts to meet the challenges of the 2020s”, including who gains and loses from the changes coming in this decade.
Moving towards a stable new relationship with the UK’s trading partners after Brexit will be a project for the whole decade, said the report. It will require decisions on how to position the UK in a world of trading giants including China, the EU and the US, it added.
The report also noted how demographic problems in the UK will mount in the 2020s, as so-called baby boomers retire and there is a rapid rise in the number of people aged over 85 who will be likely to require significant health and social care.
With new technology potentially helping deal with these changes, the report said there was a crucial role for the government in setting the UK’s strategy. “It is not clear that the UK state has the capacity to respond adequately to this scale of change,” it added.
The inquiry will publish a final report in 2023 and aims to set out a blueprint for successful UK economic policy for this decade, seeking to find the magic formula for “strong, sustainable and equitable [GDP] growth”.