General Election 2024
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Brexit & trade
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Economic growth

Life in the slow lane

Assessing the UK’s economic and trade performance since 2010

Emily Fry
Emily Fry
Simon Pittaway
Simon Pittaway
Greg Thwaites
Greg Thwaites

This briefing note is the third output in a programme of outputs designed to put the upcoming UK general election in context, supported by the Nuffield Foundation. It looks at the performance of the UK economy and trade since 2010.

The UK grew faster than other G7 economies in the first quarter of 2024 but, stepping back, our overall record on GDP growth since 2010 puts us at third in the G7. GDP growth has been flattered by a booming population, so that GDP per person has grown by only 0.9 per cent per year, and has actually fallen by 1.2 per cent over the most recent parliament. Growth in the 2010s was driven by an employment boom during the 2010s that has since turned to bust, exposing the UK’s weak productivity growth – the second-worst in the G7 since 2010.

A key driver of productivity is trade, and here the picture is mixed. The UK has cemented its role as the world’s second-biggest exporter of services but is rapidly losing market share in goods trade. Looking forward, with another employment boom not on the cards, the UK will need higher investment to drive growth in productivity and GDP per person.

Key findings

  • Real GDP grew by an average of 1.5 per cent per year between 2010 and 2023, putting us third in the G7, behind the US and Canada but ahead of France, Germany, Italy and Japan, and roughly at the median among a wider group of high-income OECD countries.
  • But our growing population flatters the UK’s performance. The population grew by 0.7 per cent per year between 2010 and 2023, equivalent to 6 million more people. This was the fastest rate of population growth for a century, and three-quarters of it was driven by migration, with the 0.5 percentage point contribution, the biggest in any 20 year period on record.
  • During the 2010s, the UK experienced an employment boom. Hours worked per person rose by almost 8 per cent over that decade, second only in the G7 to the US. This offset exceptionally weak productivity growth averaging 0.6 per cent per year in the 2010s, compared to 2.2 per cent in the decade leading up to the financial crisis, slower than every country in the G7 bar Italy. The weakness in UK productivity is pervasive across the economy, and due in part to low investment.
  • The employment boom has turned to bust in the 2020s, such that real UK GDP per person actually fell by a cumulative 1.2 per cent between Q4 2019 and Q1 2024.
  • Since 2019, the UK has cemented its role as the world’s second biggest exporter of services, with services exports growing by 7.8 per cent a year, compared to an OECD average of just 5.4 per cent. Less welcome, however, has been its performance on goods trade, where the UK has lost market share in the goods that it sells to other countries –seeing goods trade grow by just 1.1 per cent a year, compared to 5.3 per cent across the OECD.

Further reading

The art of strategy
How to make a success of the Government’s new Industrial Strategy
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Greg Thwaites, David Willetts
Getting the green light
The path to a fair transition for the transport sector
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Adam Corlett, Zachary Leather, Jonathan Marshall
Great expectations in hard times?
Previewing the big decisions for the Chancellor in the new Government’s first Budget
·
Emily Fry, Cara Pacitti, James Smith
Emily Fry
Emily Fry Senior Economist
Simon Pittaway
Simon Pittaway Senior Economist
Greg Thwaites
Greg Thwaites Research Director