World Economy

UK Economy to Decline by $67b in 15 Years

UK goods and services will face higher export costs.
UK goods and services will face higher export costs.

The UK economy is forecast to be up to £55 billion ($67.5 billion) smaller by 2030 than it would have been without Brexit, with each household potentially £1,700 worse off per year according to the Institute For Public Policy Research.

A report ‘Britain in the 2020s’ argues this will be due to the country seeing lower growth, less investment and stagnated wages over the next decade as a result of leaving the EU, NewsNow reported.

In addition, given the political emphasis placed on controlling freedom of movement, it is expected that UK goods and services will face higher export costs than before, with Britain relying on a weaker currency to retain competitiveness.

IPPR research fellow and report author, Matthew Lawrence, said: “Brexit will profoundly reshape the UK. It will be a fundamental break in the existing political-economic order. Painful trade-offs are almost certain. Growth is expected to be lower, investment-rates worse, and the public finances weaker as a result of Brexit.

“Given the likelihood of significant new barriers to trade, a managed depreciation of the currency is also likely. A more mercantilist, interventionist political economy will increase consumer costs, and hit living standards.

The wide-ranging report also highlighted the growing risk that the country’s ageing population poses, with the number of people aged 65 and over set to increase from 11.6 million to 15.4 million between 2016 and 2030, with the population of over 85s nearly doubling.

This ‘demographic tipping point’ is expected to increase demand for health and social care services, with the projected health-funding gap for the NHS at £9 billion in 2030/31, and the adult social care funding gap estimated at £13 billion.

The predicted population changes up to 2030 are:

“Public services are set for a difficult decade,” Lawrence continued.

“Demographic change will drive increasing demand at the same time as public expenditure tightens. The NHS and social care will face an acute funding challenge.”

The report argues that a new political and economic strategy will be needed over the next decade-and-a-half with a ‘steady, irreversible expansion of democratic voice and power’ to order the financial market.

“The old toolkit can only get us so far in the new times ahead. Instead, the radical disruption of the coming decades should be met with new institutional solutions if we are to flourish collectively and as individuals,” Lawrence added.

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