Post-Brexit UK witnesses health crisis amid austerity, rising inflation
Former Bank of England policymaker Michael Saunders says, “It’s not just a health issue, it’s an economic issue."

It seems there is no shortage of issues for the UK to deal with to improve the country’s economy, as health crisis became the latest addition to the puzzle which the G7 nation needs to solve.

After Brexit opened a Pandora’s box, the UK has been witnessing reduction trade, employment opportunities and investment but the pandemic and the Ukraine war generated the inflation and higher energy costs. And now the country’s economy is being hammered by record numbers of workers reporting long-term sickness.

The Office for National Statistics reported that around 2.5 million people cited long-term sickness between June and August 2022 as the main reason for economic inactivity, an increase of around half a million since 2019.

It means the number of economically inactive people — those neither working nor looking for a job — between the ages of 16 and 64 has risen by more than 630,000 since 2019. Unlike other major economies, recent U.K. data shows no sign that these lost workers are returning to the labor market, even as inflation and energy costs exert huge pressure on household finances.

Thus, the reduced expenditure on health and social services under the Tory government since 2010 is now producing the results as workers have been forced to stage strikes for higher pay.  

Although the UK avoided mass job losses during the Covid-19 pandemic as the government’s furlough programme subsidized businesses. But the country has seen a labor market exodus of unique proportions among advanced economies since lockdown measures were lifted.

In this connection, the Office for National Statistics says a range of factors could be behind the recent spike, including National Health Service waiting lists that are at record highs, an aging population and the effects of long Covid.

Though the effects of the issues mentioned above haven’t been quantified, the report suggested the increase has been driven by “other health problems or disabilities,” “mental illness and nervous disorders” and “problems connected with [the] back or neck.”

It’s a product of austerity

According to the CNBC, Jonathan Portes, professor of economics and public policy at King’s College London, says the scale of the labor market depletion is likely a combination of long Covid; other pandemic-related health issues such as mental illness; and the current crisis in the NHS.

On top of that, he noted that factors that hurt public health directly — such as increased waiting time for treatment — could have a knock-on effect: people may have to leave the workforce to care for sick relatives.

In his recent Autumn Statement, Finance Minister Jeremy Hunt announced that the government will ask over 600,000 people receiving Universal Credit — a means-tested social security payment to low income or unemployed households — to meet with a “work coach” in order to establish plans to increase hours and earnings.

Hunt also announced a review of the issues preventing re-entry into the job market and committed $340.3 million to “crack down on benefit fraud and errors” over the next two years.

Although the pandemic has greatly worsened the health crisis leaving a hole in the U.K. economy, the rise in long-term sickness claims actually began in 2019, and economists see several possible reasons why the country has been uniquely vulnerable.

Portes suggested that the government’s austerity policies — a decade of sweeping public spending cuts implemented after Former Prime Minister David Cameron took office in 2010 and aimed at reining in the national debt — had a significant part to play in leaving the UK exposed.

“The UK was particularly vulnerable because of austerity — NHS waiting lists were rising sharply, and performance/satisfaction was falling sharply, well before the pandemic,” Portes said.

Inequality

It is estimated that between 2018 and 2020, males living in the most deprived areas of England on average live 9.7 years fewer than those in the least deprived areas, with the gap at 7.9 years for females.

In the aftermath of the pandemic, NHS waiting lists grew at its fastest rate since records began in August 2007, a recent House of Commons report highlighted, with over 7 million patients on the waiting list for consultant-led hospital treatment in England as of September.

However, the report noted that this isn’t a recent phenomenon, and the waiting list has been growing rapidly since 2012.

“In other words, while the rise in waiting lists has been accelerated by the pandemic, it was also taking place for several years before the pandemic.”

Former Bank of England policymaker Michael Saunders says, “It’s not just a health issue, it’s an economic issue. It’s important in both ways.”

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