UK election winners inherit huge challenges, from economy to health
2024.07.01 01:39
By William Schomberg, Sumanta Sen and Kripa Jayaram
LONDON (Reuters) – The winners of Britain’s election on Thursday – which looks set to end 14 years in power for the Conservative Party – will take on some of the biggest challenges faced by any new government since the end of World War Two.
The economy has struggled to grow, health and other services are under severe strain and there is little room in the public finances to fix them. The government is also lagging behind its targets for immigration and house-building.
Opinion polls give a large lead to Keir Starmer’s opposition Labour Party over Prime Minister Rishi Sunak’s Conservatives. The graphics below highlight some of the main tasks ahead for the next government.
ECONOMY
Britain, like many other rich nations, has managed only sluggish economic growth for most of the period after the global financial crisis of 2008-09.
Growth in Britain since 2010 – when the Conservatives took power – has been stronger than in Germany, France or Italy. But the lead is marginal.
Taking account of changing population numbers – which have risen sharply in Britain due to high immigration – growth since 2010 has been weaker than in Germany and lags far behind the United States.
Living standards are on course to suffer their first fall over the course of a parliament since the 1950s.
Sunak says the economy is turning a corner after COVID and the energy price surge. Starmer says Labour would deliver the strongest sustained growth among the Group of Seven nations.
Since the COVID pandemic, Britain’s economy has been the second weakest in the G7.
POVERTY
Poverty has continued to diminish but the pace of the improvement has slowed since 2010.
Absolute poverty – measuring people on incomes below 60% of the median – fell five times faster in the 13 years to the 2009/10 financial year than it has since then, the Institute for Fiscal Studies, a think tank, says.
Other gauges of hardship have worsened recently, showing the impact of high inflation on poorer households more clearly.
In 2019/20, 4% of working-age adults were unable to heat their homes adequately. Three years later, that share had risen to 11%, according to the IFS.
IMMIGRATION
Successive Conservative governments missed their targets to lower net migration, even after Britain left the European Union and scrapped freedom of movement for workers from the bloc.
More workers from EU countries are now leaving Britain than arriving, but the number of people coming from other countries – especially India and Nigeria – has increased sharply.
Net migration fell to 685,000 in 2023 from a record 764,000 in 2022 but is almost four times its level in 2019 when former Conservative leader Boris Johnson promised, before an election that year, to bring it down.
INACTIVITY
One of the reasons immigration has risen so much is a shortage of workers.
Employers have struggled to fill vacancies since the pandemic as the number of people classed as having long-term sickness hit record highs and the number of students also grew.
Britain is the only country in the G7 where the inactivity rate – measuring working-age people who are neither employed nor seeking a job – is higher than before the coronavirus pandemic.
The Conservatives plan to tighten rules on long-term sickness welfare benefits. Labour says it will address the problem by investing more in Britain’s health service.
HEALTH
The health service is struggling. The number of people waiting for non-urgent treatment, which was already growing between 2010 and early 2020, surged after COVID struck and then hit almost 8 million in late 2023 in England alone, almost doubling from four years earlier.
The backlog has fallen slightly in recent months but the National Health Service is far behind a target to start treating almost all non-urgent patients within 18 weeks. It is also missing its target for treating emergency patients promptly.
Since 2010, health spending adjusted for inflation has grown more slowly than the average increases seen since the 1950s at a time when the population is growing and ageing.
HOME-BUILDING
Another promise that the Conservatives look set to miss is to increase construction of new homes after running into opposition to their plans to make it easier to build.
In the 12 months to the end of March 2023, just over 234,000 new homes were built in England and the figure has been persistently below the 300,000 target set for the mid-2020s.
Housing in Britain offers the worst value for money of any comparable economy, the Resolution Foundation think-tank says.
PRODUCTIVITY AND INVESTMENT
Key to the next government’s chances of addressing many of Britain’s most pressing challenges will be its ability to speed up economic growth which would put more money in the pockets of households and in the public coffers.
To do that, an improvement in weak productivity will be needed. London and southeast England are the only regions in the UK where output per hour is above the national average, although the capital saw its lead narrow after the pandemic, possibly reflecting the impact of increased home-working.
More private-sector investment is needed but companies have been wary about investing since 2016, the year of the Brexit referendum which triggered years of political instability.
