An analysis has been made that the UK economy has fallen into structural stagnation beyond political and administrative failures.
Martin Wolf, chief commentator of the Financial Times in the UK, noted in a column on the 7th (local time) that "the UK is experiencing three failures: political, state, and economic, among which economic failure is central."
Wolf assessed, "The UK's politics and administration are still relatively sound and capable, but the economy is failing to provide public services and living standards expected at a reasonable tax level," adding, "The stagnation in productivity and the poor growth in real disposable income are the essence of the long-term recession." According to the National Institute of Economic and Social Research (NIESR), real disposable income per capita increased by only 14% from 2007 to 2024. This is significantly lower than the 48% increase in the same indicator from 1990 to 2007.
According to statistics from the International Monetary Fund (IMF), since 2008, the annual average growth rate of per capita Gross Domestic Product (GDP) in the UK has been only 0.7%, the lowest level among the Group of Seven (G7) countries, except for Italy. The productivity indicators are also disappointing. The Organisation for Economic Co-operation and Development (OECD) reports that the real hourly productivity growth rate in the UK from 2007 to 2023 is only 6%. In contrast, the figures were 22% in the United States and 10% in the Eurozone during the same period.
Wolf analyzed, "Due to poor productivity, growth expectations are waning, turning political choices into a zero-sum game," indicating that a structure has become entrenched where increasing the income of one group requires reducing the share of another group.
In addition, changes in the demographic structure are compounding the situation. As the proportion of the elderly population increases, the working-age population is stagnating, and the group reliant on transfer income such as pensions and unemployment benefits is growing, adding to fiscal burdens. Policies aimed at labor market flexibility have led to an expansion of non-regular jobs and wage stagnation, contrary to expectations. There are also evaluations that immigration restrictions have constrained the supply of skilled labor, diminishing the vitality of the entire economy.
Wolf also stated that "the Thatcher experiment has failed," noting that neoliberal policies focused on structural reform have not yielded fundamental results. He criticized the growth strategy centered on privatization and tax cuts for not leading to sustainable productivity improvements. He continued, "Both the short-term fixes like Brexit and tax cuts, and the timidity that evades reality, are ineffective in responding to economic crises," stating that post-Brexit trade friction and investment stagnation have been burdensome for both productivity and employment.
There are concerns that the political response is also inadequate. Both ruling and opposition parties face dissatisfaction over stagnant real wages and deteriorating public services, yet they avoid fundamental choices such as tax increases and expenditure expansion. Wolf emphasized, "Recovery of growth rates is not possible through short-term prescriptions," stating that the government must concentrate on structural solutions such as formulating strategies to revive productivity, investing in infrastructure, and strengthening education and technological human capital. He also added that the political arena should honestly explain the burden-sharing to voters and persuade them on the balance of long-term sacrifices and rewards.