Not long ago, the UK was a global economic powerhouse with industrial might, political stability and financial clout. But the image of a vibrant, creative London is a thing of the past.
Today, the UK faces serious economic problems: stagnant productivity, rising inflation, high public debt and a shrinking workforce.
The UK’s GDP per capita is lower than expected 20-30 years ago, affected by the global financial crisis, rising energy prices, Brexit and political uncertainty. Brexit has reduced foreign investment and made trade difficult, costing industries such as manufacturing, finance and agriculture hundreds of thousands of jobs.
The COVID-19 pandemic and energy crisis have further fueled soaring public debt, while inflation is set to hit a 41-year high in 2022.
London remains the economic powerhouse, accounting for nearly 50% of the country’s GDP, but the gap between rich and poor is widening.
Real incomes have stagnated for more than a decade, while prices have risen faster than wages. As a result, living standards have fallen, household debt has risen, and homelessness has reached an all-time high.
The UK workforce is also in serious decline. As the population ages, many young people are opting for further education or leaving traditional ways of working. While the government has opened the door to immigration, this has caused social tensions.
At the same time, productivity – a key driver of the economy – has fallen sharply, ranking second from the bottom in the G7.
Shocks such as Brexit, the pandemic, and the energy crisis have severely weakened the UK economy, leaving it as the only G7 economy that has not fully recovered from the pandemic.
Without a drastic change in policy, the UK risks falling into a prolonged period of economic recession.
