IPPR says leaving EU will require painful trade-offs, adding to challenges of ageing population and automation of jobs

This article is more than 3 years old

This article is more than 3 years old

Britain faces a decade of disruption after Brexit with low growth, stagnating incomes for the poor and the public finances at breaking point, according to a bleak analysis by a leading thinktank.



The report, Britain in the 2020s, by the Institute of Public Policy Research, says Brexit will “profoundly reshape the UK … painful trade-offs are almost certain. Growth is expected to be lower, investment rates worse, and the public finances weaker as a result of Brexit.”

The analysis, which draws on data from the OECD, the ONS and numerous economists and researchers, forecasts a 30% increase in the number of over-65s in the population by 2030, and a doubling of the number of over-85s. It predicts that the proportion of the population that is non-white will climb to more than one in five within 12 years.

The world of work will be revolutionised with millions of jobs in retail and manufacturing disappearing as a result of automation and the internet, the report says. Income inequality will become more entrenched, as will the wealth gap between London and the rest of the country.

By 2030 households will on average be £1,700 worse off per year than they would have been if Britain had stayed in the EU, with a persistently falling currency driving up prices and hitting the living standards of poorer people the hardest, according to the report.



Low-income households are predicted to see their earnings rise by just 2% between now and 2030, leaving them little better off than a generation before. Meanwhile, the average FTSE 100 chief executive’s pay is forecast to soar to £9.5m by 2030 – 350 times the median income, up from a multiple of 144 today.

The report’s author, Mathew Lawrence, said the IPPR had taken a neutral position during the run-up to the EU referendum, and the report simply highlighted how Brexit would exacerbate challenges around inequality and low productivity that the UK was already facing.

New barriers to trade after Britain leaves the EU are likely to drive the currency down and to increase costs, the report says.

Government finances may buckle under the strain of NHS and pension spending as Britain ages and Brexit reduces the tax base. The 65-plus population will rise to 15.4 million by 2030, from 11.6 million today, while the working-age population will rise by just 3%.



The IPPR predicts a £13bn shortfall in the funding of adult social care alone by 2030 as the government struggles to finance care for elderly people in their homes.



Pressure on schools, hospitals and infrastructure will also increase as Britain’s population continues to grow rapidly despite a short-term post-Brexit reduction in EU migration. The report forecasts that the UK will have the fastest growing population of any major country in Europe, overtaking France’s population by 2030 and Germany’s in the late 2040s.

The IPPR also predicts a more diverse country, with the non-white proportion rising from 14% in 2011 to 21% by 2030 and to more than a third of the population by 2050.

Vast numbers of workers in the UK face losing their jobs as automation progresses, with the economy soon hitting “peak human” before robots and artificial intelligence take over, the IPPR argues.



It forecasts that 2m jobs in retail will disappear by 2030 and 600,000 will go in manufacturing.

Britain in the 2020s will continue to see a hollowing out of middle-income jobs, with large numbers of well-paid jobs in a few industries – largely in London and the south-east – offset by a growing precariat of poorly paid, often self-employed workers. “There will be more self-employed workers in the 2020s than public sector employees,” the report says.

It says the rest of the world also faces a slowdown in economic growth, partly as population growth slows and partly because of climate change.



It also forecasts crises for China. By 2030 the country will have 17 of the top 50 cities in the world ranked by GDP, but its rapidly ageing population, credit bubbles and political uncertainty will undermine its rise and ensure the US remains the dominant global power.

Keir Starmer MP, the shadow Brexit secretary, said: “This report shows once again the clear dangers of a hard Brexit and the importance of ensuring we get the best possible Brexit deal that protects jobs, the economy and living standards.

“It also reminds us that there are wider and profound challenges facing the Britain in the years and decades to come - both to our economy, society and our place in the world. Labour has an obligation to future generations to find progressive and effective responses, and to help bring Britain back together after a deeply divisive referendum.”

Gerard Lyons, a leading pro-Brexit economist and former adviser to Boris Johnson, dismissed much of the IPPR’s findings as “second-hand questionable figures” and “meaningless jargon”.

He said: “Far from being a constraint, Brexit provides the UK with a great opportunity to adopt both a domestic and a global policy agenda to address many of the challenges highlighted by the IPPR in this report.”

David Campbell Bannerman, a Tory MEP and member of the Leave Means Leave group which this week asked business groups across Europe to put pressure on their governments to negotiate a free trade agreement with Britain, also criticised the report. “No surprises here from such a favourite Blairite thinktank which receives EU funding. This is misery wrapped in humbug,” he said.

“It takes no account of the benefit of UK negotiating free trade deals around the world, of billions saved in deregulation of EU over-regulation, nor of more jobs, better treatment and greater training of the UK workforce once immigration is controlled and the £12bn net savings from EU contributions reinvested.”

Looking ahead: what the IPPR foresees

2% – forecast total income growth for poor households between now and 2030.

£9.5m – predicted pay of FTSE 100 CEOs by 2030.

£341bn – difference between taxes raised and expected spending by 2050.



76 million – population of the UK when it overtakes Germany and becomes Europe’s biggest country in the late 2040s.

21% – non-white proportion of the population by 2030.

15.4 million – number of over-65s in 2030, compared with 11.6 million today.

80% – increase in the number of adults over 65 with dementia by 2030.

10% – decline in China’s working population by 2030, by which time Africa will have more working-age people than China.

1tn – number of sensors connected to the internet by 2025.

2m – number of jobs lost in retail by 2030.

600,000 – number of jobs lost in manufacturing by 2030.

15m – number of current jobs that will be automated in the coming decades.

3m – number of new jobs that will be created by 2030, largely in healthcare and business services.