Since the great financial crash of 2007, the UK economy has struggled. Although the past 15 years have been challenging from a global perspective, compared to many international competitors, the UK has slipped behind.
Economic growth before global financial crisis of 2007-09 was 2.7%, the new normal is now closer to just 1.5% and with the economy heading into recession, it is likely to get worse before it gets better.
One of the great manifestations of the UK’s poor economic performance is its historically low real wage growth.
Median wage growth is important because it reflects typical wages, rather than GDP per capita which might be distorted by a few top earning workers or companies.
This shows how the UK has fallen behind other countries in wage growth. The only major country with worse wage growth is Japan, which witnessed a median wage growth of 1.4% during this period.
The UK’s poor performance
Average median disposable income is important as it gives a better indication of living standards that GDP per capita which can be distorted by company profit, (e.g. high oil prices increasing oil output) or higher incomes at the top of the income spectrum.
Real national income excluding North Sea. Source Bank of England.
Reasons for UK Economic Decline?
Deindustrialisation The early 1980s saw a repid decline in UK manufacturing. This was due to two factors
Monetarism of Mrs Thatcher’s government – High-interest rates and tight fiscal policy to bring inflation under control led to deep recession. Combined with the rapid appreciation of Sterling due to high-interest rates and the discovery of oil in the north sea. This made UK manufacturing uncompetitive and also highlighted a lack of flexibility and competitiveness.
The long-term malaise of British industry in the post-war period characterised by poor industrial relations, low investment and poor take-up of new management techniques.
Reliance on financial services. Deregulation of financial services. In 1986 Mrs Thatcher’s government introduced the Financial services deregulation Act also known as the “Big Bang”. This deregulated many financial services, leading to strong growth in the size of the city, which excelled in a new range of financial instruments, such as derivates and credit default swaps. The deregulation helped London consolidate its position as a major international centre. However, this meant that when the credit crunch hit the financial system in 2007, the UK economy was heavily exposed. The sharp fall in the Sterling highlights how markets readjusted to the financial crisis.
A near 30% depreciation in Sterling exchange rate index in 2007/08 illustrated the UK’s exposure to a financial crisis.
Low productivity growth
Although global productivity growth has stalled, the decline in UK productivity has been more striking.
Post-war the UK’s productivity growth was around 2.5%. Between Q1 2007 and Q2 2022, productivity has grown by just 6.4% over 15 years – an average growth rate of 0.4%
Some of the reasons for the slowdown in productivity are shared on a global scale
Demographic changes – an ageing population (though actually UK is less affected by declining birth rate than many OECD countries.
Slowing technological innovation. No major breakthroughs and diminishing returns in scientific development.
Some issues specific to the UK include
Low adoption of new technologies, such as robot automation. UK is only in 24th position in the global league of robot densities, behind countries including Slovenia, Slovakia and the Czech Republic. (all countries with strong growth in media wages.) (link)
Low business investment
According to the CBI, business investment in the UK has fallen from 14.7% of GDP in 1989, to a low of 10% at end of 2019. And since 2019, it has fallen further.
“Between 2021-2025, the UK Government is projected to invest an average of 3.4% of GDP, compared to 3.9% in the US, 4.1% in Canada, 5.9% in Japan and 9.0% in China.
Total investment which includes both private and public investment, shows the UK lagging behind major economies.
Whilst China has over-invested in a real estate bubble. The UK’s relatively low level of investment does raise concerns for the future, especially over the lack of investment in renewable energy and green technology which will be increasingly important in the future.
The CBI identify issues with poor vocational training in the UK. They state as the economy develops 90% of the workforce will need to learn new skills, and it will cost an additional £13bn a year simply to stop skills gaps from worsening. In the public spending cuts of 2010 onwards, the education budget was squeezed more than other protected departments.
Depreciation in Sterling
The long-term depreciation in Sterling is fundamentally a reflection of the UK’s declining competitiveness. In the short term, the exchange rate can be influenced by temporary factors, such as interest rates, confidence and speculation. But, the long-term driver in exchange rates is relative inflation rates. If UK inflation is relatively higher than competitors then there will be a depreciation in Sterling as UK goods are less attractive. The problem is that on using real exchange rate measures, Sterling’s recent fall is not overdone, in fact, there is further to fall.
The austerity of the 2010s, discouraged growth and investment at a time of weaker economic growth. Creating a cycle of budgetary pressures and low investment.
This shows how the UK lags behind other countries in low levels of investment.
The UK is an economy historically based on trade. In the mid-1970s, UK trade accounted for 60% of GDP – above Germany and the United States. Since that peak, trade as a share of GDP has declined and has been overtaken by Germany.
Given the importance of trade and the fact 50% of trade is with European Union, the decision to leave the single market and customs unions have added extra frictions, which is causing the UK to lose out on exports
Early research by the OBR shows UK goods export volumes hit by the leaving of the Single Market.
Labour Participation
Labour market participation has been hampered by the loss of EU workers following Brexit, (though to some extent compensated by non-EU migrants). But, also rise in early retirement and long-term inactivity due to sickness.
Long term decline
In the nineteenth century, the UK was the largest economy in the world. In 1900, the UK was the most industrialised economy in the world – 40% more industrialised than the 2nd biggest economy United States.
Post-war decline
In 1950, 25% of world Exports were British, but over the post-war period, the UK declined relatively. This was partly due to the ‘catch-up’ theory. Germany and Japan bouncing back from disaster of the Second World War. But, there was evidence of low investment and low take up of new dynamic technologies. UK industrial relations were poor with many hours lost to strikes and the disharmony making it difficult for more efficient management techniques and boosting labour productivity.
UK education also slipped behind, especially in vocational training. By the early 1980s, some 80% to 90% of school leavers in France and West Germany received vocational training, compared with only 40% in the United Kingdom.
“British factory managers preferred to operate in a cycle of under-investment, limited research and development, low wages and a shrinking pool of clients, rather than risk a fresh start with new products in new markets.”
You can read more at our privacy page, where you can change preferences whenever you wish.
Manage consent
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
__cfduid
1 month
The cookie is used by cdn services like CloudFlare to identify individual clients behind a shared IP address and apply security settings on a per-client basis. It does not correspond to any user ID in the web application and does not store any personally identifiable information.
AWSALBCORS
7 days
This cookie is used for load balancing services provded by Amazon inorder to optimize the user experience. Amazon has updated the ALB and CLB so that customers can continue to use the CORS request with stickness.
cookielawinfo-checkbox-advertisement
1 year
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement".
cookielawinfo-checkbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
gdpr_status
6 months 2 days
This cookie is set by the provider Media.net. This cookie is used to check the status whether the user has accepted the cookie consent box. It also helps in not showing the cookie consent box upon re-entry to the website.
SERVERID
past
This cookie is used to assign the user to a specific server, thus to provide a improved and faster server time. It remembers which server had delivered the last page on to the browser. It also helps in load balancing.
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Cookie
Duration
Description
bcookie
2 years
This cookie is set by linkedIn. The purpose of the cookie is to enable LinkedIn functionalities on the page.
lang
session
This cookie is used to store the language preferences of a user to serve up content in that stored language the next time user visit the website.
lidc
1 day
This cookie is set by LinkedIn and used for routing.
na_id
1 year 1 month
This cookie is set by Addthis.com to enable sharing of links on social media platforms like Facebook and Twitter
na_rn
1 month
This cookie is used to recognize the visitor upon re-entry. This cookie allows to collect information on user behaviour and allows sharing function provided by Addthis.com
na_sc_e
1 month
This cookie is used to recognize the visitor upon re-entry. This cookie allows to collect information on user behaviour and allows sharing function provided by Addthis.com
na_sr
1 month
This cookie is set by Addthis.com. This cookie is used for sharing of links on social media platforms.
na_srp
1 minute
This cookie is used to recognize the visitor upon re-entry. This cookie allows to collect information on user behaviour and allows sharing function provided by Addthis.com
na_tc
1 year 1 month
This cookie is set by the provider Addthis. This cookie is used for social media sharing tracking service.
ouid
1 year 1 month
The cookie is set by Addthis which enables the content of the website to be shared across different networking and social sharing websites.
pid
1 year 1 month
Helps users identify the users and lets the users use twitter related features from the webpage they are visiting.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Cookie
Duration
Description
_gat
1 minute
This cookies is installed by Google Universal Analytics to throttle the request rate to limit the colllection of data on high traffic sites.
d
3 months
This cookie tracks anonymous information on how visitors use the website.
guid2
1 year
This cookie is set by the provider Delta projects. This cookie is used to track the individual sessions on the website, which allows the website to compile statistical data from multiple visits. This generated data is used for creating leads for marketing purposes.
YSC
session
This cookies is set by Youtube and is used to track the views of embedded videos.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Cookie
Duration
Description
__gads
1 year 24 days
This cookie is set by Google and stored under the name dounleclick.com. This cookie is used to track how many times users see a particular advert which helps in measuring the success of the campaign and calculate the revenue generated by the campaign. These cookies can only be read from the domain that it is set on so it will not track any data while browsing through another sites.
_ga
2 years
This cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors.
_gid
1 day
This cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form.
_gu
1 month
This cookie is set by the provider Getsitecontrol. This cookie is used to distinguish the users.
ANON_ID
3 months
This cookie is provided by Tribalfusion. The cookie is used to give a unique number to visitors, and collects data on user behaviour like what page have been visited. This cookie also helps to understand which sale has been generated by as a result of the advertisement served by third party.
APID
1 year
This cookie is used to store information of how a user behaves on multiple websites. This information is them used to customize the relevant ads to be displayed to the users.
eud
1 year 24 days
The domain of this cookie is owned by Rocketfuel. This cookie is used to sync with partner systems to identify the users. This cookie contains partner user IDs and last successful match time.
GUC
This cookie is set by the provider Yahoo. This cookie is used for Yahoo conversion tracking.
is_unique
5 years
This cookie is set by StatCounter Anaytics. The cookie is used to determine whether a user is a first-time or a returning visitor and to estimate the accumulated unique visits per site.
sc_is_visitor_unique
2 years
This cookie is used to store a random ID to avoid counting a visitor more than once.
sync-his
1 year
The domain of this cookie is owned by Videology.This cookie is used in association with the cookie "tidal_ttid". This cookie is used to keep track of the last day when the user ID synced with a partner. This is done by matching "tidal_ttid" with a partner's user ID inorder to recognise the same user.
UserID1
3 months
The cookie sets a unique anonymous ID for a website visitor. This ID is used to continue to identify users across different sessions and track their activities on the website. The data collected is used for analysis.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Cookie
Duration
Description
__kuid
7 days
This cookie is used to collect information of the visitors, this informations is then stored as a ID string. The ID information strings is used to target groups having similar preferences, or for targeted ads.
_rxuuid
1 year
The main purpose of this cookie is targeting, advertesing and effective marketing. This cookie is used to set a unique ID to the visitors, which allow third party advertisers to target the visitors with relevant advertisement up to 1 year.
ab
1 year
This domain of this cookie is owned by agkn. The cookie is used for targeting and advertising purposes.
ANON_ID_old
3 months
This cookie helps to categorise the users interest and to create profiles in terms of resales of targeted marketing. This cookie is used to collect user information such as what pages have been viewed on the website for creating profiles.
APIDTS
1 day
This cookie is set by the provider Yahoo.com. This coookie is used to collect data on visitor preference and behaviour on website inorder to serve them with relevant content and advertisement.
CMID
1 year
The cookie is set by CasaleMedia. The cookie is used to collect information about the usage behavior for targeted advertising.
CMPRO
3 months
This cookie is set by Casalemedia and is used for targeted advertisement purposes.
CMPS
3 months
This cookie is set by Casalemedia and is used for targeted advertisement purposes.
CMRUM3
1 year
This cookie is set by Casalemedia and is used for targeted advertisement purposes.
CMST
1 day
The cookie is set by CasaleMedia. The cookie is used to collect information about the usage behavior for targeted advertising.
DSID
1 hour
This cookie is setup by doubleclick.net. This cookie is used by Google to make advertising more engaging to users and are stored under doubleclick.net. It contains an encrypted unique ID.
dyn_u
1 year
This cookie is used collect information on user behaviour and interaction for serving them with relevant ads and to optimize the website.
everest_g_v2
1 year
The cookie is set under eversttech.net domain. The purpose of the cookie is to map clicks to other events on the client's website.
gi_u
1 year
The cookie is set by Adhigh. The cookie is used for ad serving purposes and track user online behaviour. The cookie also stores the number of time the same ad was delivered, it shows the effectiveness of each ad.
google_push
5 minutes
This cookie is set by the Bidswitch. This cookie is used to collect statistical data related to the user website visit such as the number of visits, average time spent on the website and what pages have been loaded. This collected information is used to sort out the users based on demographics and geographical locations inorder to serve them with relevant online advertising.
HAPLB5S
This cookie is set by the provider Sonobi. This cookie is used to track the visitors on multiple webiste to serve them with relevant ads.
id
3 months
The main purpose of this cookie is targeting and advertising. It is used to create a profile of the user's interest and to show relevant ads on their site. This Cookie is set by DoubleClick which is owned by Google.
IDE
1 year 24 days
Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This is used to present users with ads that are relevant to them according to the user profile.
IDSYNC
1 year
This cookie is used for advertising purposes.
KADUSERCOOKIE
3 months
The cookie is set by pubmatic.com for identifying the visitors' website or device from which they visit PubMatic's partners' website.
KTPCACOOKIE
1 day
This cookie is set by pubmatic.com for the purpose of checking if third-party cookies are enabled on the user's website.
ljt_reader
1 year
This is a Lijit Advertising Platform cookie. The cookie is used for recognizing the browser or device when users return to their site or one of their partner's site.
mc
1 year 1 month
This cookie is associated with Quantserve to track anonymously how a user interact with the website.
mdata
1 year 1 month
The domain of this cookie is owned by Media Innovation group. This cookie registers a unique ID used to identify a visitor on their revisit inorder to serve them targeted ads.
mt_mop
1 month
Stores information about how the user uses the website such as what pages have been loaded and any other advertisement before visiting the website for the purpose of targeted advertisements.
ouuid
1 year
This cookie is used to store the unique visitor ID which helps in identifying the user on their revisit, to serve retargeted ads to the visitor.
ouuid_lu
1 year
This cookie is used for serving the retargeted ads to the users. This cookie is used in association with the cookie "ouuid".
ov
1 year 1 month
This cookie is set by the provider mookie1.com. This cookie is used for serving the user with relevant content and advertisement.
pxrc
2 months
The purpose of the cookie is to identify a visitor to serve relevant advertisement.
rlas3
1 year
The cookie is set by rlcdn.com. The cookie is used to serve relevant ads to the visitor as well as limit the time the visitor sees an and also measure the effectiveness of the campaign.
rud
1 year 24 days
The domain of this cookie is owned by Rocketfuel. The main purpose of this cookie is advertising. This cookie is used to identify an user by an alphanumeric ID. It register the user data like IP, location, visited website, ads clicked etc with this it optimize the ads display based on user behaviour.
ruds
session
The domain of this cookie is owned by Rocketfuel. This cookie is a session cookie version of the 'rud' cookie. It contain the user ID information. It is used to deliver targeted advertising across the networks.
sa-user-id
1 year
The cookie is set by StackAdapt used for advertisement purposes.
sa-user-id-v2
1 year
The cookie is set by StackAdapt used for advertisement purposes.
smd
1 year 24 days
This domain of this cookie is owned by Rocketfuel. This cookie is used to provide the visitor with relevant content and advertisement.
ssi
1 year
This cookie is set by Sitescout.This cookie is used for marketing and advertising. The cookie stores a unique ID used for identifying the return users device and to provide them with relevant ads.
stx_user_id
1 year
The domain of this cookie is owned by the Sharethrough. This cookie is used for advertising services.
suid_legacy
1 year
This cookie is used to collect information on user preference and interactioin with the website campaign content. This cookie is used for promoting events and products by the webiste owners on CRM-campaign-platform.
test_cookie
15 minutes
This cookie is set by doubleclick.net. The purpose of the cookie is to determine if the user's browser supports cookies.
tidal_ttid
1 year
This cookie is set by Videology. The cookie stores a videology unique identifier. It helps to know whether a visitor has seen the ad and clicked or not.
tluid
3 months
This cookie is set by the provider AdRoll.This cookie is used to identify the visitor and to serve them with relevant ads by collecting user behaviour from multiple websites.
tuuid
1 year
This cookie is set by .bidswitch.net. The cookies stores a unique ID for the purpose of the determining what adverts the users have seen if you have visited any of the advertisers website. The information is used for determining when and how often users will see a certain banner.
tuuid_lu
1 year
This cookie is set by .bidswitch.net. The cookies stores a unique ID for the purpose of the determining what adverts the users have seen if you have visited any of the advertisers website. The information is used for determining when and how often users will see a certain banner.
uid
2 months
This cookie is used to measure the number and behavior of the visitors to the website anonymously. The data includes the number of visits, average duration of the visit on the website, pages visited, etc. for the purpose of better understanding user preferences for targeted advertisments.
uuid
1 year 1 month
To optimize ad relevance by collecting visitor data from multiple websites such as what pages have been loaded.
uuid2
3 months
This cookies is set by AppNexus. The cookies stores information that helps in distinguishing between devices and browsers. This information us used to select advertisements served by the platform and assess the performance of the advertisement and attribute payment for those advertisements.
VISITOR_INFO1_LIVE
5 months 27 days
This cookie is set by Youtube. Used to track the information of the embedded YouTube videos on a website.
wfivefivec
1 year 1 month
The domain of this cookie is owned by Dataxu. The main business activity of this cookie is targeting and advertising. This cookie tracks the advertisement report which helps us to improve the marketing activity.