Deteriorating 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 disease strikes that the benefits of good health become truly apparent.

The same is true of savings. Having long taken good health for granted, many economies are now realizing the serious economic and societal costs of poor health.

Until the 20th century, people’s lives were well described by the writings of the English philosopher Thomas Hobbes in the 17th century – short and brutal. The average lifespan was just over 40 years and had remained around these levels for many centuries.

The 20th century marked an inflection point in lifespan and much more. Medical, economic and social advances have enabled people in many countries to free themselves from their Hobbesian shackles. In the United Kingdom, the average longevity has doubled in the space of a century, rising from 40 to over 80 years. This was an unprecedented leap forward in human lifespan.

This extension has transformed not only lives but also economies. Falling infant mortality and increasing longevity caused the working population in the UK to almost double between 1900 and 2000. And this increase in labor supply added directly and significantly significant to the growth potential of the UK, the first cylinder of economic growth. Improved health has also boosted worker productivity in the workplace, for example due to reduced absences, the second cylinder of growth.

To a large extent, the five-fold increase 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 – labor market activity and productivity – good health has been a hero of the 20th century growth story, though it is largely unsung.

Unannounced, that is, before he backtracked. Because improvements in life expectancy this century have leveled off in a number of countries, including the UK and the US. In some poorer places, and among some poorer households, life expectancy is now falling. Up to a third of the lives of the poorest people are now in poor health.

In the UK, the proportion of the working-age population reporting long-term illness has risen to one in six people, or around 7 million people, after standing at just over 5 million as recently as in 2010. While Covid-19 made matters worse, these increases 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 fastest among 16-24 year olds, especially mental health problems. One in eight people now report a long-term illness. High and rising levels of economic and financial insecurity appear to have been the main driver, after more than a decade of stalled real wages. With real incomes set to contract sharply in the year ahead, these pressures will worsen.

Beyond their impact on individuals, these adverse health trends now have macroeconomic consequences. They contribute to the stagnation of productivity in the UK, given the strong evidence that poor physical and especially mental health lead to lower levels of productivity in the workplace.

And health issues are now contributing to the shrinking UK workforce. That’s more than half a million less than pre-Covid levels, with some surveys suggesting up to two-thirds of that reflects poor health. In the UK, around 2.5 million people are now economically inactive due to health problems.

After being a strong tailwind for two centuries, health is now a headwind boosting UK economic growth, perhaps for the first time since the Industrial Revolution. The two cylinders of growth now appear at a standstill in the case of productivity or conversely in the case of activity, with health being a key contributor.

Economies are not alone in feeling these pressures. Health systems are too. In the UK, the NHS has seen hospital waiting lists nearly double since 2010. Health service workers are now getting as sick as those they treat, with one in five reporting high levels of depression.

This negative feedback loop between economic health and medical health, in the context of an increasingly fragile health system, must somehow be broken and the resilience of the system strengthened.

While there are no magic bullets or one-size-fits-all solutions, much stronger support for preventative health measures – including investing more in health education in schools, mental health issues in young people and measures that encourage better nutrition – are all necessary conditions for restoring growth.

Deteriorating health is an economic headwind

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