UK economy will resemble Italy’s if it fails to rebuild – report

BRITAIN’S economy will look more like that of Italy than Germany by the end of the decade if it continues to underperform, a think-tank has warned.

The Resolution Foundation (RF) – working with the London School of Economics Centre for Economic Performance – said the UK was facing a

“decisive decade” of change.

In its report, it said the country urgently needed to address the “seismic economic shifts” of the Covid aftermath, Brexit, the transition to net-zero emissions and an ageing population combined with rapid technological change.

Unless it rebuilds its economic strategy in the light of these challenges, it said the country risked falling further behind its competitors.

While Boris Johnson had committed to “build back better” after the pandemic, the government had yet to set out a plan for achieving its objective.

The report said the UK had started the decade with considerable strengths – record employment levels pre-pandemic, global strengths in high-value services and a political consensus over its net-zero target.

However, it warned that without a proper strategy the UK risked squandering these strengths while failing to address its major weaknesses – from the slowest productivity growth for more than 120 years to greater inequality than any country in the EU except Bulgaria. It said that if the UK’s pace of underperformance relative to Germany continued at the same rate it would end this decade with percapita national income closer to that of Italy.