UK election: Starmer could yet prove that hard work trumps charisma
Consider a country whose economy has suffered due to years of lower productivity growth than its peers, high inequality and low private investment. To compound its problems, it is not part of dynamic free-trade zones, which would lower its tariffs, push its industry to be more competitive and reduce friction for goods crossing borders. This is the huge to-do-list that Keir Starmer faces as the new Prime Minister of UK, but it is also more or less the challenge that New Delhi confronts.
Starmer’s is harder, though. Unlike in India, expectations of public services are high, especially of its National Health Service, whose backlog of appointments is a staggering 7.6 million. In addition, years of misguided austerity when interest rates were low mean that the UK’s public investment since 2000 lags its OECD peers by a cumulative £500 billion of what it should have been to keep pace, according to Resolution Foundation, a think tank.
“Labour productivity grew by just 0.4% a year in the UK in the 12 years following the global financial crisis, half the rate of the 25 richest OECD countries. The UK’s productivity gap with France, Germany and the US has doubled since 2008 to an estimated 18%. Weak productivity growth has fed directly into flatlining wages and sluggish income growth.
Fifteen years of lost wage growth have cost the average worker £10,700 a year," the Foundation notes in a report. As in India, an urgent need to create remunerative jobs for young people is an uppermost concern. Young folks entering the British workforce have not seen wages move up (unlike in the US, for instance) and have the added problem of facing even higher costs if they want to buy new homes.
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