UK dangers Italy-style decline as financial challenges mount – think-tank

Skyscrapers in the financial district of the City of London can be seen from City Hall in London, Britain, on May 8, 2021. REUTERS / Henry Nicholls

Britain faces a decade of major political challenges that could bring economic performance closer to that of Italy than Germany, Europe’s powerhouse, a think tank said Tuesday.

The Resolution Foundation said the UK needs to address Brexit-related issues on top of those of other countries, including the impact of COVID-19, the transition to a net carbon-free economy, an aging population and technological change.

Without proper planning, Britain risked the slowest productivity growth in over 120 years in the past decade and higher inequality than any other country in the European Union except Bulgaria.

“The UK’s recent record of poor productivity, stagnant living standards and high inequality makes a new economic approach desirable,” said Clive Cowdrey, founder of the Resolution Foundation.

“What makes a new approach essential is the extent of the changes to come.”

Prime Minister Boris Johnson has pledged to “level” the UK economy by targeting investment and jobs in areas lagging behind London and in areas around the capital. He also speaks of a “global Great Britain” after leaving the European Union.

However, the Resolution Foundation said the UK has no plan to meet these goals over the next decade and the country is risking wasting economic strengths such as high employment levels that are now being jeopardized by increasing automation.

When the Resolution Foundation launched an investigation with the London School of Economics’ Center for Economic Performance, it said Italy had seen no growth in GDP per capita in the past two decades, while Britain had recently fallen further behind Germany.

“If the UK’s pace of underperformance against Germany continues at the same pace in the 2020s, it will end this decade with a GDP per capita much closer to Italy than Germany,” the think tank said.

The research is funded by the Nuffield Foundation, a charity that funds social policy research.

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