Recovery from the coronavirus crisis won’t be easy anywhere in the world. It may, however, be considerably more difficult in the UK than elsewhere because the UK’s underlying economy was in much worse shape before the crisis hit us than is generally realised.
Inflation and unemployment have recently been low and government borrowing much reduced, but our rate of investment has not been nearly high enough and our economic growth rate has been way below the world average. Productivity and real wages have been stagnant. To finance huge balance of payments deficits every year, we have sold far too many assets and borrowed much too much. We have massive disparities between London and the regions and much too much inequality between the generations and between the rich and the poor.
The main reason why our economy is so unbalanced and fragile is that we have allowed our country to become hopelessly uncompetitive as a location for manufacturing. This is why we have deindustrialised to a greater extent than any other comparable country. As a result, we have lost the productivity gains and good, steady jobs that are so much easier to secure in manufacturing than in services.
Almost every town and city outside London has too little to sell to the rest of the world to pay its way which is why, as a nation, we are falling deeper and deeper in debt. With both the damage from coronavirus and other very expensive problems coming down the track, unless we get our economy to perform much better, living standards in the UK may well be significantly lower in 2030 than in either 2007 or 2019.