New technologies and decarbonisation are economic challenges to UK
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The UK is facing a “seismic” economic shift in the next decade due to new technologies like automation and decarbonisation, a thinktank has warned.
According to the Resolution Foundation, the UK is facing a “decisive decade” of change due to five major factors including the Covid aftermath, Brexit, the net zero transition, an older population and rapid technological change.
In its report dubbed 'The Economy 2030 Inquiry', it calls on the Government to employ an economic strategy that takes these shifts into account or risk leaving the nation “diminished and falling further behind its competitors”.
Efforts to reach net zero carbon emissions by 2050 present economic opportunities, the report finds, but urgent action needs to be taken, such as a broad programme of heat-pump installations. Currently the UK installs virtually zero heat pumps and it needs to ramp up to installing 3,000 every day by 2030.
New technologies could also disrupt living standards, with the OECD estimating that one-in-seven jobs could disappear as a result of automation in the next 15-20 years.
The OECD recently found that the career aspirations of young people had changed little in the last 20 years despite fears that around 35 per cent of the dream jobs cited by teenagers are at risk of automation.
The report also found that the surge in home working since the start of the pandemic could force lower earners to find new jobs in new places, the complications of Brexit mean the UK has to deal with higher trade costs than before, and the UK’s ageing population is expected to present new challenges for the economy.
“While the Government has committed to ‘Build Back Better’, ‘Level Up’ and embrace ‘Global Britain’, neither it, nor any major political party, have an economic plan for achieving these welcome high-level objectives. Any such strategy was notably absent from last week’s Queen’s Speech,” the report says.
If the UK’s underperformance relative to Germany continues at the same pace in the 2020s, then it will end this decade with GDP per capita much closer to that of Italy than Germany.
Sir Clive Cowdrey, founder of the Resolution Foundation, said: “The UK’s recent record of weak productivity, stagnant living standards and high inequality makes a new economic approach desirable. What makes a new approach essential is the scale of coming change.
“The UK now faces a decisive decade, as the aftermath of Covid-19, Brexit and the Net Zero transition come together with major shifts in technology and demography. This matters for far more than economics. Failing to rise to this challenge risks leaving the nation diminished and divided.”
Baroness Minouche Shafik, co-chair of The Economy 2030 Inquiry, said: “The decade ahead will be decisive for the UK. New trading relationships, the digital revolution, and net zero will fundamentally change our economy and society. We need to rethink our economic strategy to rise to these challenges and ensure that we create a society in which everyone can thrive.”
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