Centre for Economic Performance:
UK facing a ‘decisive decade’ of change
18 May 2021
The UK is facing a ‘decisive decade’ of change as five seismic economic shifts – the Covid aftermath, Brexit, the Net Zero transition, an older population and rapid technological change - come together.
The Economy 2030 Inquiry, launched today, will take on the challenge of drawing up an economic strategy to address the opportunities and challenges of the 2020s.
The Inquiry’s launch report The UK’s decisive decade outlines the major changes ahead, with the 2020s likely to define Britain for many decades to come. These changes include:
- Covid: Greater home working means more lifestyle choices for professionals, but forces lower earners to find new jobs in new places.
- Brexit: As well as utilising 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.
- Net Zero: Decarbonisation presents many economic opportunities, but action is urgent. We need to go from installing almost zero heat pumps each year to installing 3,000 every single day by 2030.
- Technology: New technologies drive up but also disrupt living standards. The OECD estimates one-in-seven jobs could disappear as a result of automation in the next 15-20 years.
- Demography: The ratio of those under 20 or over 65 to those aged between 20 and 64 is set to increase from 72 per 100 to 79 per 100 between 2020 and 2030 – a faster-projected change than in any other decade in the first half of the 21st century.
Baroness Minouche Shafik, Director of the LSE and Co-Chair of The Economy 2030 Inquiry, said: “The decade ahead will be decisive for the UK. New trading relationships, the digital revolution, and net zero will fundamentally change our economy and society. We need to rethink our economic strategy to rise to these challenges and ensure that we create a society in which everyone can thrive.”
Sir Clive Cowdrey, Founder of the Resolution Foundation and Co-Chair of The Economy 2030 Inquiry, said: “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.
“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 for far more than economics. Failing to rise to this challenge risks leaving the nation diminished and divided.”