A long-term disease crisis threatens the UK economy

A queue of ambulances outside the emergency department of the Royal London Hospital in November. 24, 2022, in London. In the UK, the number of ‘economically inactive’ people – those not working or looking for work – aged 16-64 has increased by more than 630,000 since 2019.

Leon Neal/Getty Images

LONDON – Along with skyrocketing inflation and energy costs, a Brexit-related trade slump and a looming recession, the UK economy is being hit by a record number of workers claiming long-term illness.

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

The number of ‘economically inactive’ people – those who are neither working nor looking for work – aged 16-64 has risen by more than 630,000 since 2019. Unlike other major economies, recent UK figures show no no sign that these lost workers are returning to the labor market, although inflation and energy costs are putting a lot of pressure on household finances.

The UK avoided massive job losses during the Covid-19 pandemic as the government’s furlough program subsidized businesses to retain workers. But since the lockdown measures were lifted, the country has seen a labor market exodus of proportions unique among advanced economies.

In its report last month, the ONS said a number of factors could be behind the recent uptick, including NHS waiting lists at record highs, the aging of the population and the effects of the long Covid.

“Younger people have also seen some of the biggest relative increases, with some industries, such as wholesale and retail, being hit harder than others,” the ONS said.

Although the effects of the above-mentioned problems have not been quantified, the report suggests that the increase has been driven by “other health problems or disabilities”, “mental illnesses and nervous disorders” and “problems related to [the] back or neck”.

Legacy of austerity

Jonathan Portes, professor of economics and public policy at King’s College London, told CNBC that the scale of the job market drain is likely a combination of long Covid; other pandemic-related health issues such as mental illness; and the current SNS crisis.

He also noted that factors that harm public health directly, such as increased waiting times for treatment, could have a knock-on effect: people may have to leave the workforce to care for family members sick

“It’s worth remembering that the UK has been here before, possibly at least twice. In the early 1990s, the UK saw a strong recovery, with unemployment falling, after ‘Black Wednesday’ , but also saw a significant and sustained increase in the number of people claiming disability benefits,” Portes said, adding that not working in general is bad for both health and employability.

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“Clearly the government is not doing much about it. Apart from solving the crisis in the NHS, the other key policy area is support for sick and disabled people to return to work, and there is no enough of that, instead. the government is harassing Universal Credit people with penalties and fines that we know don’t help much.”

In his recent Autumn Statement, Chancellor of the Exchequer Jeremy Hunt announced that the government will ask more than 600,000 people on Universal Credit, a social security payment to households on low incomes or out of work, to meet with a “job coach” to set plans. to increase hours and income.

Hunt also announced a review of problems preventing re-entry into the labor market and pledged £280 million ($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 by leaving a hole in the UK economy, the rise in long-term illness claims really started in 2019 and economists see several possible reasons why the country has been uniquely vulnerable.

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Portes suggested that the government’s austerity policies – a decade of deep public spending cuts implemented after former prime minister David Cameron took office in 2010 and aimed at reining in the national debt – had a important role in leaving the UK exposed.

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

“And support for those on incapacity and disability benefits was removed in the early 2010s. More generally, austerity has led to a steeper gradient in health outcomes by income/class.”

Inequality and increasing waiting lists

This is borne out in national data: the ONS estimates that between 2018 and 2020, men living in the most deprived areas of England live on average 9.7 years less than those in the least deprived areas, with a gap of 7.9 years for women.

The ONS noted that both sexes saw “statistically significant increases in inequality in life expectancy at birth from 2015 to 2017”.

Following the pandemic, NHS waiting lists grew at their fastest pace since records began in August 2007, a recent House of Commons report highlighted, with more than 7 million patients on the waiting list for consultant-led hospital treatment in England from September. . .

However, the report notes that this is not a recent phenomenon and that the waiting list has been growing rapidly since 2012.

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“Before the pandemic, in December 2019, the waiting list was over 4.5 million, almost two million more than in December 2012, a 74% increase,” he said.

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

Former Bank of England policy chief Michael Saunders, now senior policy adviser at Oxford Economics, also told CNBC that the UK has been particularly hard hit by Covid in terms of severity, and that part of ‘this may have been a result of the higher rates in the country. . of pre-existing health conditions, such as obesity, which may have been exacerbated by Covid.

“The UK is a relatively unequal country, so that may be part of the reason why, even if we’ve had the same wave of Covid as other countries, we could have a greater effect on public health, because if you like it, you have a greater effect on public health. queue of people who would be more affected by it,” he added.

Saunders suggested that any government growth strategy should include measures to address these health challenges, which are now inextricable from the labor force participation rate and the wider economy.

“It’s not just a health issue, it’s an economic issue. It’s important on both counts. I think it’s important enough as a health issue, but it deserves additional importance because of the effects on potential production that then feed into ‘these other economic problems . . .’

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