Worsening health is an economic headwind


The writer is chief executive of the Royal Society of Arts

As individuals, we often take our health for granted. It is only when ill health strikes that the benefits of good health truly become apparent.

The same is true of economies. Having long taken good health for granted, many economies are now waking up to the severe economic and societal costs of poor health.

Until the 20th century, people’s lives were well-described by English philosopher Thomas Hobbes’s writing in the 17th century — short and brutish. The average lifespan was little more than 40 years and had remained around these levels for many centuries.

The 20th century marked an inflection point in lifespans and much else. Medical, economic and social advances enabled people in many countries to break free of their Hobbesian chains. In the UK, average longevity doubled in the short space of a century, from 40 to over 80 years. This was an unprecedented leap forward in human lifespans.

This lengthening transformed not only lives but economies. Falls in infant mortality and rises in longevity meant that the working population in the UK almost doubled between 1900 and 2000. And this rise in the labour supply added directly and significantly to the UK’s growth potential, the first cylinder of economic growth. Improved health also boosted the productivity of workers in the workplace, for example due to reduced absence, the second cylinder of growth.

In no small measure, the fivefold rise in living standards during the 20th century, unprecedented in human history, can be attributed to improved health outcomes. By firing the twin cylinders of economic growth — labour market activity and productivity — good health was a hero of the 20th century growth story, if a largely unheralded one.

Unheralded, that is, before it went into reverse. Because improvements in life expectancy in this century have flattened-off in a number of countries, including the UK and US. In some poorer places, and among some poorer households, life expectancies are now falling. As much as a third of poorer people’s lives are now being lived in poor health.

In the UK, the proportion of the working age population reporting long-term sick has risen to one in six or around 7mn people, having stood at just over 5mn as recently as 2010. While Covid-19 has worsened matters, these rises predate the pandemic. They reflect a steady increase in, among other things, cardiovascular and mental health problems.

The rise in poor health in the UK has been most rapid among 16-24-year-olds, especially mental health problems. One in eight now report long-term sickness. High and rising levels of economic and financial insecurity appear to have been the prime mover, after more than a decade of stalled real pay. With real incomes set to contract sharply in the year ahead, these pressures will worsen.

As well as their impact on individuals, these adverse health trends are now having macroeconomic consequences. They are contributing to the flatlining of UK productivity, given strong evidence that poor physical and in particular mental health result in lower levels of workplace productivity.

And health problems are now contributing to a shrinking UK workforce. This is over half a million below pre-Covid levels, with some surveys suggesting as much as two-thirds of this reflects poor health. In the UK, around 2.5mn people are now economically inactive due to ill health.

Having been a strong tailwind for two centuries, health is now a strengthening headwind to UK economic growth, for perhaps the first time since the Industrial Revolution. The twin cylinders of growth now appear to be stalled in the case of productivity or in reverse in the case of activity, with health a key contributor.

It is not just economies that are feeling these pressures. Healthcare systems are too. In the UK, the NHS has seen hospital waiting lists almost double since 2010. Workers in the health service are now becoming as ill as those they are treating, with one in five reporting high levels of depression.

This adverse feedback loop between economic and medical health, against a backdrop of an increasingly fragile healthcare system, needs somehow to be broken and the resilience of the system strengthened.

While there are neither quick fixes nor singular solutions, a much sharper skewing of support towards preventive health measures — including investing more heavily in health education in schools, mental health problems in young people and measures which encourage improved diet -are all necessary conditions to restore growth.

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