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UK Economy - What can be done to reduce economic inactivity?

Graham Watson

23rd October 2022

The UK's employment rate has fallen since the pandemic – unlike other major economies. There is a lengthy piece here by The Observer's Heather Stewart on the rise in economic inactivity in the UK and the corresponding drop in the UK's employment rate, largely as a result of coronavirus. Estimates suggest up to a third of those who left the workforce since 2020 due to long-term sickness have long covid.

The effects are twofold: long COVID, most obviously, but also deterred workers, who have left the labour market, but they have the same effect in reducing the economy's productive capacity, shifting the LRAS curve leftwards. This, of course, has significant implications for the government's ability to achieve its macroeconomic objectives.

Here is an answer to a short answer question on economic inactivity.

Will Hutton suggests here that we shouldn't all be in thrall to 'the markets' but should instead be considering the changes that we will need to make to better promote growth, even in these seemingly difficult times.

He argues that not all market actors are short-termist, or entirely consumed by profit, and instead have social or environmental imperatives in mind. Equally, he believes that we need to rethink certain aspects of existing structures, notably Council Tax, which is in desperate need of reform.

However, I'm not convinced that it's going to reverse the current trajectory of economic growth.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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