By Ian McConnell

A REPORT on the state of the UK titled Stagnation Nation never sounded like it was going to make for uplifting reading. However, the scale of the economic and societal challenge laid out in the report, produced by the Resolution Foundation think-tank and the Centre for Economic Performance at the London School of Economics, is even greater than you might imagine from this demoralising title.

It is, crucially, also in stark contrast to the picture of the UK painted by the Conservative Government, which has attempted to hold up Britain as a country that has by dint of Brexit suddenly been reawakened as a global powerhouse. The report does highlight the very major detrimental impact of Brexit on real incomes, but more of that later.

What seems clear from the stark findings of Stagnation Nation, the interim report for the Nuffield Foundation-funded Economy 2030 Inquiry by the Resolution Foundation and Centre for Economic Performance, is something needs to be done desperately to address the UK’s huge economic woes and challenges and tackle inequalities.

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The Tories' track record on this front, however, suggests we should not be optimistic in any way whatsoever about their willingness or ability to deliver what is needed. In fact, from an external perspective, it looks as if the Conservatives’ policies and ideologies are heading in the entirely opposite direction to that needed if economic and societal challenges are to be tackled.

The Stagnation Nation report makes for very grim, if entirely realistic, reading.

It declares: “The UK has great strengths, but is over a decade into a period of stagnation. The toxic combination of slow growth and high inequality was posing challenges for low to middle-income Britain’s living standards even before the post-pandemic cost-of-living crisis struck. The task of the 2020s is to overcome this stagnation while wrestling with a decade of significant economic change, as Britain recovers from the pandemic, adjusts to exiting the EU, and transitions towards a net zero future.”

The report, published last week, signals the task ahead will not be an easy one.

It declares: “Countries can go through phases of relative stability, but the UK in the 2020s will not be one of those countries. Drivers of change shared with other advanced economies, from demographics to the net zero transition, are combining with the UK-specific shock of Brexit and a far messier recovery from Covid-19 than most anticipated.”

The “UK-specific” shock of Brexit is surely the last thing the country needed.

The report states: “Brexit has already brought significant change – between 2019 and 2021 UK trade openness fell by eight percentage points (four times larger than the fall experienced in France). More is to come: some sectors such as food manufacturing will grow, and others such as fishing will shrink. Rather than closing regional divides or reinvigorating manufacturing, by the end of the decade Brexit will see annual real wages £470 lower relative to if the UK was still in the EU.”

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This reality is clearly entirely at odds with the tall tales about Brexit told by this Conservative administration, which would seemingly have people believe that leaving the European Union has made the UK a colossus on the world stage again when it comes to trade and somehow boosted the nation.

And the Brexit delusions of this Government sadly look extremely unlikely to change in any way, when you look at the field of candidates to replace Boris Johnson as leader of the Conservative Party. The face at the top may change but the song looks set to remain the same not just with Brexit but with other aspects of this Conservative Government’s agenda that are detrimental to the economy and to society.

In the context of key facts set out in Stagnation Nation, we should remember the Conservatives have been in power since 2010.

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Under the heading of “low growth”, the report notes “real wages grew by an average of 33 per cent a decade from 1970 to 2007, but this fell to below zero in the 2010s”.

That is quite the track record for the Tories on this front.

We also have the key fact that “income inequality in the UK was higher than any other large European country in 2018”. This is, obviously, an utterly miserable statistic and one the Tories really should sit up and take note of, in spite of their ideology.

The report also points out that “low-income households in the UK are 22% poorer than their counterparts in France, and typical household incomes are 9% lower”.

It also observes “eight million young workers have never worked in an economy with sustained average wage rises, and those born in the early 1980s were almost half as likely to own a home as those born in the early 1950s, at age 30”. This key fact comes under the heading of “stalled progress”, which is arguably putting it mildly.

We have heard a lot from the Tories about “levelling up” in recent times but we should remember they have been in power since 2010 and there remains little sign of it.

The Stagnation Nation report notes: “Income per person in the richest local authority – Kensington and Chelsea (£52,500) – was over four times that of the poorest – Nottingham (£11,700) – in 2019.”

It also observes “half of shift workers in Britain receive less than a week’s notice of their working hours or schedules”.

The report notes that “young people from the most-deprived areas are two-and-a-half times less likely to leave their home area upon reaching adulthood than their peers in the least-deprived places”.

And it observes, while “wealth has risen from three to almost eight times national income since the 1980s”, wealth taxes have flatlined as a share of gross domestic product. This is under the heading of “burden-sharing”.

There should certainly be plenty of food for thought in this important piece of research for whoever takes over as Prime Minister, and that person’s Cabinet. It seems unlikely however, going by recent history, that these senior Tories will take any of this on board.

Their attention seems likely to be focused elsewhere, as they attempt to continue to paint a picture of a strong and fair UK, boosted by Brexit, even though the reality is totally different.