The Observer view on Britain’s dire economic outlook

theguardian.com:

Britain’s growth prospects are the gloomiest of all developed nations. The OECD predicted last week that the UK economy would not grow at all next year, the worst outlook for any OECD nation. This follows warnings in April from the IMF that the UK will experience the worst growth out of the G7 nations in 2023. After a decade of stagnant wages, it seems Britons need to resign themselves to the fact that the buoyant growth of the 2000s is but a distant memory.

Every country has suffered the shock of the pandemic, followed by the spike in oil and wheat prices triggered by Russia’s illegal war in Ukraine. But other developed economies have proved more resilient, enjoying export-driven recoveries in the wake of Covid. Here in Britain, the economic malaise left exposed by the 2008 financial crisis is long term and structural.

This crisis was supposed to prompt a big economic rethink: a reckoning with Britain’s addiction to growth fuelled by rising levels of consumer debt enabled by rising house prices. The then shadow chancellor George Osborne pledged to rebalance the economy away from debt-driven growth to more productive development, driven by business investment and exports, underpinned with an expansion of the UK’s manufacturing base and a reduction in the huge regional inequalities between the south-east and the rest of the country.

No such thing materialised. Instead, the least affluent areas of the country were forced to bear the biggest burden of cuts to public services, undermining their potential to attract investment. Britain’s sluggish recovery from the financial crisis – average GDP growth in the decade after 2008 was a full percentage point lower than it was in the run-up to the year – was propelled by consumer