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The deteriorating health of Britons is holding back economic growth for the first time since the Industrial Revolution after years of underinvestment in services, Andy Haldane has warned.
The chief executive of the Royal Society of Arts (RSA) said more than a century of progress on health and wellbeing was being reversed, with a direct impact on the economy and the cost of living crisis.
“We’re in a situation for the first time, probably since the industrial revolution, where health and wellness are in isolation,” he said.
“Having been an accelerator of well-being for the past 200 years, health is now serving as a brake on the growth and well-being of our citizens.”
Speaking at the Health Foundation thinktank’s annual Real Challenges lecture, Haldane said the economy had been held back by a sharp drop in the number of people in the British workforce since the start of the Covid pandemic.
However, the Bank of England’s former chief economist said the global health crisis only served as a “tipping point”.
“Spending on healthcare systems, at least by G7 comparison, the UK sits at the bottom of the pack,” he said.
“It should come as no surprise that we are seeing macroeconomic headwinds such as record numbers of unfilled vacancies. We don’t have enough people.”
The Bank of England recently warned that it may need to raise interest rates further to prevent workers from demanding inflation-linked pay rises in response to labor shortages.
Interest rates have risen since last year to prevent what the central bank says will be a second round of earnings hikes on inflation over the next two years.
A report by the newly established Commission on the Future of Employment Support found that the UK is one of only five countries in the industrialized world with a weaker labor market than before the Covid-19 pandemic and will have the worst record by the next. year
Only Iceland, Switzerland, Latvia, the UK and the USA recorded a lower employment rate than in 2019. And while the UK’s employment rate, which measures the number of workers as a proportion of the total workforce, has remained weak, Iceland, Switzerland and the US have enjoyed average increases of 2% over the past 12 months.
“If these trends continue, by the first quarter of 2023 the UK could become the only developed economy in the world where the employment rate will be lower than it was before the pandemic,” the report said.
About 600,000 workers have left the workforce, including 200,000 who have been out of work for five years or more due to ill health.
An estimated 30,000 more people have long-term Covid and are unable to work. Almost 50,000 more people have retired early in the past two years, while the number of people who have never worked has risen by 250,000, and two-thirds of this group are students and a third are unable to work for those with ill health or disabilities. Instead of leaving it, get to work.
The situation has been made worse by retirements and lower migration by the baby boomer generation – “with half a million fewer non-UK-born workers compared to the pre-2016 trend”.
Tony Wilson, head of the Institute for Employment Studies, which backed the commission, said: “We now have a real opportunity to rethink our approach and build something for the future that can support higher growth, better living standards. and local economies.”
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