Editing Economy of the United Kingdom (section)

==History==
{{Main|Economic history of the United Kingdom}}

===1945 to 1979===
The WWII net losses in British national wealth amounted to 18.6% (£4.595 billion) of the prewar wealth (£24.68 billion), at 1938 prices.<ref>{{cite book|chapter=The United Kingdom: 'Victory at all costs' |first1=Stephen |last1=Broadberry |first2=Peter |last2=Howlett|title=The economics of World War II: Six great powers in international comparison|editor-last=Harrison|editor-first=Michael|publisher=Cambridge University Press|date=1998| page=69|url=http://ndl.ethernet.edu.et/bitstream/123456789/13137/1/300%20.%20Mark_Harrison.pdf}}</ref> After the Second World War, [[Attlee ministry|a new Labour government]] fully nationalised the [[Bank of England]], civil aviation, telephone networks, railways, gas, electricity, and the coal, iron and steel industries, affecting 2.3 million workers.<ref name="Parker2009">{{cite book|first=David|last=Parker|title=The Official History of Privatisation: The Formative Years 1970–1987|url=https://books.google.com/books?id=6m98AgAAQBAJ&pg=PA6|volume=1|year=2009|publisher=Routledge|isbn=978-1-134-03140-5|page=7}}</ref> Post-war, the United Kingdom enjoyed a long period without a major recession; there was a rapid growth in prosperity in the 1950s and 1960s, with unemployment staying low and not exceeding 3.5% until the early 1970s.<ref>{{cite journal|title=Unemployment statistics from 1881 to the present day|first1=James|last1=Denman|first2=Paul|last2=McDonald|publisher=The Government Statistical Office|year=1996|journal=Labour Market Trends|volume=104|issue=15–18}}</ref> The annual rate of growth between 1960 and 1973 averaged 2.9%, although this figure was far behind some other European countries such as [[French Fourth Republic|France]], [[West Germany]] and [[Italy]].<ref name="DowDow2000">{{cite book|author1=J. Christopher R. Dow|first2=Christopher|last2=Dow|title=Major Recessions: Britain and the World, 1920–1995|url=https://books.google.com/books?id=pmaXSKBqMjcC|year=2000|publisher=Oxford University Press|isbn=978-0-19-924123-1}}</ref>

Deindustrialisation meant the closure of operations in mining, heavy industry, and manufacturing, resulting in the loss of highly paid working-class jobs.<ref>{{Cite journal | last = High | first = Steven | title = "The wounds of class": a historiographical reflection on the study of deindustrialization, 1973–2013 | journal = [[History Compass]] | volume = 11 | issue = 11 | pages = 994–1007 | publisher = [[Wiley-Blackwell|Wiley]] | doi = 10.1111/hic3.12099 | date = November 2013 }}</ref> The UK's share of manufacturing output had risen from 9.5% in 1830 during the [[Industrial Revolution]] to 22.9% in the 1870s. It fell to 13.6% by 1913, 10.7% by 1938, and 4.9% by 1973.<ref name="Gat2008">{{cite book|first=Azar|last=Gat|title=War in Human Civilization|url=https://books.google.com/books?id=S6gSDAAAQBAJ&pg=PA519|year=2008|publisher=Oxford University Press|isbn=978-0-19-923663-3|page=519}}</ref> Overseas competition, lack of innovation, trade unionism, the welfare state, loss of the [[British Empire]], and cultural attitudes have all been put forward as explanations.<ref name="Laybourn1999">{{cite book|first=Keith|last=Laybourn| author-link = Keith Laybourn |title=Modern Britain Since 1906: A Reader|url=https://books.google.com/books?id=VJpiVcZbaSEC&pg=PA230|year=1999|publisher=I.B.Tauris|isbn=978-1-86064-237-1|page=230}}</ref> It reached crisis point in the 1970s against the backdrop of a worldwide energy crisis, high inflation, and a dramatic influx of low-cost manufactured goods from Asia.<ref>{{cite web |publisher=Department for Business, Energy & Industrial Strategy|title=Historical coal data: coal production, availability and consumption 1853 to 2015 |year=2016|url=https://www.gov.uk/government/statistical-data-sets/historical-coal-data-coal-production-availability-and-consumption-1853-to-2011}}</ref>

During the [[1973 oil crisis]] (which saw oil prices quadruple),<ref name="cambridge">{{cite book|title=The Cambridge Economic History of Modern Britain|editor-first1=Roderick|editor-last1=Floud|editor-first2=Paul|editor-last2=Johnson|first=Stephen|last=Broadberry|year=2003|page=66|volume=3|isbn=978-0-521-52738-5|publisher=Cambridge University Press|url=https://books.google.com/books?id=ugx3XIkE-mEC}}</ref> the [[1973–74 stock market crash]], and the [[secondary banking crisis of 1973–75]], the British economy fell into the [[1973–75 recession]] and the government of [[Edward Heath]] was ousted by the [[Labour Party (UK)|Labour Party]] under [[Harold Wilson]], which had previously governed from 1964 to 1970. Wilson formed a [[minority government]] in March 1974 after the [[February 1974 United Kingdom general election|general election on 28 February]] ended in a [[hung parliament]]. Wilson secured a three-seat overall majority in a [[October 1974 United Kingdom general election|second election]] in October that year. The UK recorded weaker growth than many other European nations in the 1970s; even after the recession, the economy was blighted by rising unemployment and double-digit inflation, which exceeded 20% more than once and was rarely below 10% after 1973.

In 1976, the UK was forced to apply for a loan of £2.3&nbsp;billion from the [[International Monetary Fund]]. [[Denis Healey]], then [[Chancellor of the Exchequer]], was required to implement public spending cuts and other economic reforms in order to secure the loan, and for a while the British economy improved, with growth of 4.3% in early 1979.<ref>{{Cite journal |last1=Matthews |first1=Kent |last2=Minford |first2=Patrick |last3=Nickell |first3=Stephen |last4=Helpman |first4=Elhanan |date=1987 |title=Mrs Thatcher's Economic Policies 1979–1987 |url=https://www.jstor.org/stable/1344621 |journal=Economic Policy |volume=2 |issue=5 |pages=59–101 |doi=10.2307/1344621 |jstor=1344621 |issn=0266-4658}}</ref> Following the discovery of large [[North Sea]] oil reserves, the UK became a net exporter of oil by the end of the 1970s, which contributed to a massive appreciation of the pound, making exports in general more expensive and imports cheaper. Oil prices doubled between 1979 and 1980, further reducing manufacturing profitability.<ref name="cambridge"/> After the [[Winter of Discontent]], when the UK was hit by numerous public sector strikes, the government of [[James Callaghan]] lost a vote of no confidence in March 1979. This triggered the [[1979 United Kingdom general election|general election on 3 May 1979]] which resulted in [[Margaret Thatcher]]'s Conservative Party forming a new government. In retrospect, the 1970s is considered to have been a "[[Economy of the United Kingdom|lost decade]]" for Britain economically (as well as culturally).<ref>{{Cite journal |last=Porion |first=Stéphane |date=2016 |title=Reassessing a Turbulent Decade: the Historiography of 1970s Britain in Crisis |url=https://shs.cairn.info/revue-etudes-anglaises-2016-3-page-301?lang=en |journal=Études anglaises |language=en |volume=69 |issue=3 |pages=301–320 |doi=10.3917/etan.693.0301 |issn=0014-195X}}</ref><ref>{{cite book |author=Laurel Forster |title=British Culture and Society in the 1970s: The Lost Decade |author2=Sue Harper |year=2010 |isbn=1-4438-1734-1}}</ref>

===1979 to 1997===
A new period of [[neo-liberal]] economics began with this election. During the 1980s, many state-owned industries and utilities were [[privatised]], taxes cut, trade union reforms passed and markets deregulated. GDP fell by 5.9% initially,<ref>Phillip Inman, "Reports of recovery much exaggerated, says CBI", The Guardian (UK), 15 June 2009, p. 21.</ref> but growth subsequently returned and rose to an annual rate of 5% at its peak in 1988, one of the highest rates of any country in Europe.<ref name="imf">{{cite web |url=http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 |title=Edit/Review Countries |publisher=Imf.org |date=29 April 2003 |access-date=5 September 2012 |url-status=dead|archive-url=https://web.archive.org/web/20100611172746/http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 |archive-date=11 June 2010 }}</ref><ref name=ons>The ONS figures, reproduced by the Local Government Association, [http://www.lga.gov.uk/lga/aio/1215871 "From Recession to recovery"], November 2008. Retrieved 13-05-09, p. 7, are slightly lower, giving 4.5% in 1988. {{webarchive |url=https://web.archive.org/web/20111102003004/http://www.lga.gov.uk/lga/aio/1215871 |date=2 November 2011 }}</ref>

Thatcher's modernisation of the economy was far from trouble-free; her battle with inflation, which in 1980 had risen to 21.9%, resulted in a substantial increase in unemployment from 5.3% in 1979 to over 10.4% by the start of 1982, peaking at nearly 11.9% in 1984 – a level not seen in Britain since the [[Great Depression]].<ref name="HowBritainChanged">{{cite web|url=https://www.theguardian.com/politics/datablog/2013/apr/08/britain-changed-margaret-thatcher-charts|work=The Guardian|title=How Britain changed under Margaret Thatcher|date=8 April 2013|access-date=7 April 2016}}</ref> The rise in unemployment coincided with the [[early 1980s recession|early 1980s global recession]], after which UK GDP did not reach its pre-recession rate until 1983. In spite of this, Thatcher [[1983 United Kingdom general election|was re-elected]] in June 1983 with a landslide majority. Inflation had fallen to 3.7%, while interest rates were relatively high at 9.56%.<ref name="HowBritainChanged"/> The increase in unemployment was largely due to the government's [[economic policy]] which resulted in the closure of outdated factories and [[Coal mining in the United Kingdom#Decline in volume|coal pits]]. Manufacturing in England and Wales declined from around 38% of jobs in 1961 to around 22% in 1981.<ref>{{cite web|url=http://www.ons.gov.uk/ons/rel/census/2011-census-analysis/170-years-of-industry/170-years-of-industrial-changeponent.html |archive-url=http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/census/2011-census-analysis/170-years-of-industry/170-years-of-industrial-changeponent.html |url-status=dead|archive-date=5 January 2016 |title=170 Years of Industrial Change across England and Wales |date=5 June 2013 |author=ONS |website=The National Archives |access-date=6 December 2016 }}</ref> This trend continued for most of the 1980s, with newer industries and the service sector enjoying significant growth. Many jobs were also lost as manufacturing became more efficient and fewer people were required to work in the sector. Unemployment had fallen below 3&nbsp;million by the time of Thatcher's third successive election victory in June 1987; and by the end of 1989 it was down to 1.6&nbsp;million.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/vote_2005/basics/4393313.stm |title=UK Politics &#124; The Basics &#124; past_elections &#124; 1983: Thatcher triumphs again |work=BBC News |date=5 April 2005 |access-date=5 September 2012}}</ref>

Britain's economy slid into [[Early 1990s recession|another global recession]] in late 1990; it shrank by a total of 6% from peak to trough,<ref name="2009dec22">{{cite news|url=https://www.theguardian.com/business/2009/dec/22/britain-still-in-recession|title=UK recession longest and deepest since war, says ONS|work=The Guardian|first=Larry|last=Elliott|date=22 December 2009|access-date=9 July 2009}}</ref> and unemployment increased from around 6.9% in spring 1990 to nearly 10.7% by the end of 1993. However, inflation dropped from 10.9% in 1990 to 1.3% three years later.<ref name="HowBritainChanged"/> The subsequent economic recovery was extremely strong, and unlike after the early 1980s recession, the recovery saw a rapid and substantial fall in unemployment, which was down to 7.2% by 1997,<ref name="HowBritainChanged"/> although the popularity of the Conservative government had failed to improve with the economic upturn. The government won a fourth successive election in 1992 under [[John Major]], who had succeeded Thatcher in November 1990, but soon afterwards came [[Black Wednesday]], which damaged the Conservative government's reputation for economic competence, and from that stage onwards, the [[Labour Party (UK)|Labour Party]] was ascendant in the opinion polls, particularly in the immediate aftermath of [[Tony Blair]]'s election as party leader in July 1994 after the sudden death of his predecessor [[John Smith (Labour Party leader)|John Smith]].

Despite two recessions, wages grew consistently by around 2% per year in [[real terms]] from 1980 until 1997, and continued to grow until 2008.<ref>{{cite web|url=http://blogs.lse.ac.uk/politicsandpolicy/real-wages-and-living-standards-the-latest-uk-evidence/|title=Real wages and living standards: the latest UK evidence|date=6 April 2015|access-date=31 October 2016|first=Stephen|last=Machin|publisher=London School of Economics}}</ref>

===1997 to 2009===
In May 1997, Labour, led by Tony Blair, won the general election after 18 years of Conservative government.<ref>{{cite news|last=Wheeler |first=Brian |url=http://news.bbc.co.uk/1/hi/uk_politics/8149630.stm |title=UK &#124; UK Politics &#124; Election countdown – 1990s style |work=BBC News |date=21 July 2009 |access-date=5 September 2012}}</ref> The Labour Government inherited a strong economy with low inflation,<ref>{{cite news|url=https://www.theguardian.com/news/datablog/2009/mar/09/inflation-economics|title=UK inflation since 1948|first1=Simon|last1=Rogers|first2=Ami|last2=Sedghi|date=12 November 2013|access-date=2 June 2017|website=The Guardian}}</ref> falling unemployment,<ref>{{Cite web |title=Unemployment rate (aged 16 and over, seasonally adjusted): % – Office for National Statistics |url=https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms |access-date=2025-02-27 |website=www.ons.gov.uk}}</ref> and a [[Current account (balance of payments)|current account]] surplus.<ref name="OECD1998">{{cite book|author=OECD|title=OECD Economic Surveys: United Kingdom 1998|url=https://books.google.com/books?id=G3_WAgAAQBAJ&pg=PA20|date=16 July 1998|publisher=OECD Publishing|isbn=978-92-64-15145-1|page=20}}</ref> Blair ran on a platform of [[New Labour]] which was characterised largely by the continuation of neo-liberal economic policies, but also supporting a strong welfare state. In Britain it was largely viewed as a combination of socialist and capitalist policies, being dubbed '[[Third Way]]'.<ref>{{Cite web|url=https://www.theguardian.com/politics/2003/feb/10/labour.uk1|title = A brief history of the third way|website = [[TheGuardian.com]]|date = 10 February 2003}}</ref> Four days after the election, [[Gordon Brown]], the new Chancellor of the Exchequer, gave the Bank of England the freedom to control [[monetary policy]], which until then had been directed by the government.

During Blair's 10 years in office there were 40 successive quarters of economic growth, lasting until the second quarter of 2008. GDP growth, which had briefly reached 4% per year in the early 1990s, gently declining thereafter, was relatively anaemic compared to prior decades, such as the 6.5% per year peak in the early 1970s, although growth was smoother and more consistent.<ref name="ons" /> [[Annual growth rate]]s averaged 2.68% between 1992 and 2007,<ref name="imf" /> with the finance sector accounting for a greater part than previously. The period saw one of the highest GDP growth rates of any developed economy and the strongest of any European nation.<ref>{{cite news|last=Davis |first=Evan |url=http://news.bbc.co.uk/1/hi/uk_politics/6643601.stm |title=Blair's surprising economic legacy |work=BBC News |date=10 May 2007 |access-date=5 September 2012}}</ref> At the same time, [[household debt]] rose from £420&nbsp;billion in 1994 to £1&nbsp;trillion in 2004 and £1.46&nbsp;trillion in 2008 – more than the entire GDP of the UK.<ref>{{cite book|first=Mark|last=Horsley|title=The Dark Side of Prosperity: Late Capitalism's Culture of Indebtedness|url=https://books.google.com/books?id=QMfVBgAAQBAJ&pg=PA31|date=28 March 2015|publisher=Ashgate Publishing|isbn=978-1-4724-3657-3|page=31}}</ref>

This extended period of growth ended in [[Calendar year#Quarters|Q2]] of 2008 when the United Kingdom entered the [[Great Recession]] brought about by the [[2008 financial crisis]]. The UK was particularly vulnerable to the crisis because its financial sector was the most highly [[leveraged]] of any major economy.<ref name="GiudiceKuenzel2012">{{cite book|first1=Gabriele|last1=Giudice|first2=Robert|last2=Kuenzel|first3=Tom|last3=Springbett|title=UK Economy: The Crisis in Perspective|url=https://books.google.com/books?id=02hd8pJhDAMC&pg=PA205|year=2012|publisher=Routledge|isbn=978-1-136-31210-6|page=205}}</ref> Beginning with the collapse of [[Northern Rock]], which was taken into [[public ownership]] in February 2008, other banks had to be partly nationalised. The [[Royal Bank of Scotland Group]], at its peak the fifth-largest bank in the world by [[market capitalisation]], was effectively nationalised in October 2008. By mid-2009, [[HM Treasury]] had a 70.33% controlling shareholding in RBS, and a 43% shareholding, through the [[UK Financial Investments Limited]], in [[Lloyds Banking Group]]. The Great Recession, as it came to be known, saw unemployment rise from just over 1.6&nbsp;million in January 2008 to nearly 2.5&nbsp;million by October 2009.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/7304330.stm |title=UK unemployment falls by 32,000 |work=BBC News |date=19 March 2008 |access-date=5 September 2012}}</ref><ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/8415683.stm |title=Unemployment rise continues to slow |work=BBC News |date=16 December 2009 |access-date=5 September 2012}}</ref>

In August 2008 the IMF warned that the country's outlook had worsened due to a twin shock: financial turmoil and rising commodity prices.<ref>{{cite web|url=http://www.imf.org/external/pubs/ft/survey/so/2008/CAR081108A.htm |title=Twin Global Shocks Dent United Kingdom Outlook |publisher=Imf.org |date=11 August 2008 |access-date=5 September 2012}}</ref> Both developments harmed the UK more than most developed countries, as it obtained revenue from exporting financial services while running deficits in goods and commodities, including food. In 2007, the UK had the world's third largest [[List of countries by current account balance|current account deficit]], due mainly to a large deficit in manufactured goods. In May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance.<ref>{{cite web|url=http://www.imf.org/external/np/ms/2008/052308.htm |title=United Kingdom – 2008 Article IV Consultation Concluding Statement of the Mission, 23 May 2008 |publisher=Imf.org |date=23 May 2008 |access-date=5 September 2012}}</ref> The UK's output per hour worked was on a par with the average for the "old" [[Statistics relating to enlargement of the European Union#1995 enlargement|EU-15]] countries.<ref name="europa2">{{cite web|url=http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=STRIND_ECOBAC&root=STRIND_ECOBAC/ecobac/eb022|title=Labour productivity per hour worked|publisher=epp.eurostat.ec.europa.eu|access-date=25 September 2014|url-status=dead|archive-url=https://web.archive.org/web/20120520171740/http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996%2C39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=STRIND_ECOBAC&root=STRIND_ECOBAC%2Fecobac%2Feb022|archive-date=20 May 2012}}</ref>

===2009 to 2020===
In March 2009, the Bank of England (BoE) cut interest rates to a then-historic low of 0.5% and began [[quantitative easing]] (QE) to boost lending and shore up the economy.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/7925620.stm|title=UK interest rates lowered to 0.5%|date=5 March 2009|work=BBC News|access-date=2 October 2016}}</ref> The UK exited the [[Great Recession]] in Q4 of 2009 having experienced six consecutive quarters of negative growth, shrinking by 6.03% from peak to trough, making it the longest recession since records began and the deepest since [[World War&nbsp;II]].<ref name="2009dec22"/><ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/8378129.stm|title=UK economy shrinks less than thought|work=BBC News|date=25 November 2009}}</ref> Support for Labour slumped during the recession, and the [[2010 United Kingdom general election|general election of 2010]] resulted in [[Cameron–Clegg coalition|a coalition government]] being formed by the Conservatives and the [[Liberal Democrats (UK)|Liberal Democrats]].

In 2011, [[Household debt|household]], financial, and business debts stood at 420% of GDP in the UK.{{efn|Compared to 279% in Japan, 253% in France, 209% in the United States, 206% in Canada, and 198% in Germany.}}<ref name="Meyer2012">{{cite book|first=Annette|last=Meyer|title=Value Added / 14 National Labor Forces|url=https://books.google.com/books?id=xTJDv05aRIYC&pg=PA170|year=2012|publisher=Dorrance Publishing|isbn=978-1-4349-7375-7|page=170}}</ref> As the world's [[Heavily indebted poor countries|most indebted country]], spending and investment were held back after the recession, creating [[economic malaise]]. However, it was recognised that [[government borrowing]], which rose from 52% to 76% of GDP, had helped to avoid a [[Great Depression in the United Kingdom|1930s-style depression]].<ref>{{cite news|url=https://www.bbc.co.uk/news/business-15820601|title=UK's debts 'biggest in the world'|first=Robert|last=Peston|website=BBC News|date=21 November 2011|access-date=2 June 2017}}</ref> Within three years of the general election, government cuts aimed at reducing the budget deficit had led to [[public sector]] job losses well into six figures, but the [[private sector]] enjoyed strong jobs growth.

The 10 years following the Great Recession were characterised by extremes. In 2015, employment was at its highest since records began,<ref>{{cite news|last1=Stewart| first1=Heather| last2=Wintour| first2=Patrick| title=UK employment rate hits highest level since records began| url=https://www.theguardian.com/business/2015/feb/18/uk-employment-rate-hits-highest-level-since-records-began| access-date=8 June 2015|newspaper=The Guardian| date=18 February 2015}}</ref> and GDP growth had become the fastest in the [[Group of Seven (G7)]] and Europe,<ref>{{cite news| last=Wholehouse| first=Matthew| title= UK has fastest-growing economy, International Monetary Fund says| url=https://www.telegraph.co.uk/finance/economics/10988849/UK-has-fastest-growing-economy-International-Monetary-Fund-says.html |archive-url=https://ghostarchive.org/archive/20220111/https://www.telegraph.co.uk/finance/economics/10988849/UK-has-fastest-growing-economy-International-Monetary-Fund-says.html |archive-date=11 January 2022 |url-access=subscription |url-status=live|date=24 July 2014|  newspaper=The Telegraph |access-date=8 June 2015| location=London}}{{cbignore}}</ref> but [[workforce productivity]] was the worst since the 1820s, with any growth attributed to a fall in working hours.<ref>{{cite news|url=https://www.ft.com/content/edcb9224-f1ff-11e7-b220-857e26d1aca4 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/edcb9224-f1ff-11e7-b220-857e26d1aca4 |archive-date=10 December 2022 |url-access=subscription |url-status=live|title=UK productivity grows at quickest pace in six years|first=Gavin|last=Jackson|date=5 January 2018|website=Financial Times|access-date=6 January 2018}}</ref> Output per hour worked was 18% below the average for the rest of the G7.<ref>{{cite web|url=https://www.theguardian.com/business/2016/feb/18/uk-productivity-gap-widens-to-worst-level-since-records-began|title=UK productivity gap widens to worst level since records began|work=The Guardian|date=18 February 2016|access-date=7 April 2016}}</ref> Real wage growth was the worst since the 1860s, and the [[Governor of the Bank of England]] described it as a lost decade.<ref>{{cite news|url=https://www.ft.com/content/c0c36268-bb0d-11e6-8b45-b8b81dd5d080 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/c0c36268-bb0d-11e6-8b45-b8b81dd5d080 |archive-date=10 December 2022 |url-access=subscription|title= UK suffering 'first lost decade since 1860s', Carney says|date=6 December 2016|access-date=6 December 2016|first=Chris|last=Giles|newspaper=Financial Times}}{{subscription required}}</ref> Wages fell by 10% in real terms in the eight years to 2016, whilst they grew across the OECD by an average of 6.7%.<ref>{{cite news|url=https://www.theguardian.com/money/2016/jul/27/uk-joins-greece-at-bottom-of-wage-growth-league-tuc-oecd|title= UK joins Greece at bottom of wage growth league|date=27 July 2016|access-date=31 October 2016|newspaper=The Guardian|first1=Katie|last1=Allen|first2=Larry|last2=Elliott}}</ref> For 2015 as a whole,<ref>{{cite news|url=https://www.telegraph.co.uk/business/2016/03/31/uks-current-account-deficit-jumps-to-eye-watering-record-high/ |archive-url=https://ghostarchive.org/archive/20220111/https://www.telegraph.co.uk/business/2016/03/31/uks-current-account-deficit-jumps-to-eye-watering-record-high/ |archive-date=11 January 2022 |url-access=subscription |url-status=live|title=UK's current account deficit jumps to 'eye watering' record high|date=31 March 2016|access-date=7 April 2016|work=The Telegraph}}{{cbignore}}</ref> the [[Current account (balance of payments)|current account]] deficit rose to a record high of 5.2% of GDP (£96.2bn),<ref>{{cite news|url=https://www.bbc.co.uk/news/business-35931968|title=UK current account deficit at new high|date=31 March 2016|access-date=7 July 2016|work=BBC News}}</ref> the highest in the developed world.<ref>{{cite news|url=http://news.sky.com/story/the-16322bn-current-account-deficit-mystery-10411813|publisher=Sky News|title=The £22bn current account deficit mystery|date=5 July 2016|access-date=10 July 2016|first=Ed|last=Conway}}</ref> In Q4 2015, it exceeded 7%, a level not witnessed during peacetime since records began in 1772.<ref name="aep">{{cite news|url=https://www.telegraph.co.uk/business/2016/03/31/britain-courts-fate-on-brexit-with-worst-external-deficit-in-his/ |archive-url=https://ghostarchive.org/archive/20220111/https://www.telegraph.co.uk/business/2016/03/31/britain-courts-fate-on-brexit-with-worst-external-deficit-in-his/ |archive-date=11 January 2022 |url-access=subscription |url-status=live|title=Britain courts fate on Brexit with worst external deficit in history|first=Ambrose|last=Evans-Pritchard|newspaper=The Telegraph|date=31 March 2016|access-date=23 October 2016}}{{cbignore}}</ref> The UK relied on foreign investors to plug the shortfall in its [[balance of payments]].<ref>{{cite news|url=https://www.theguardian.com/business/2016/mar/31/uk-economy-growth-record-trade-deficit|title= Current account deficit hits record high as GDP revised higher|first=Katie|last=Allen|newspaper=The Guardian|date=21 March 2016|access-date=23 October 2016}}</ref> Homes had become [[affordability of housing in the United Kingdom|less affordable]], a problem exacerbated by QE, without which house prices would have fallen by 22%, according to the BoE's own analysis.<ref>{{cite magazine|title=After the Fall|date=9 September 2018|magazine=The Sunday Times Magazine|first=John|last=Lanchester|page=29|url=https://www.thetimes.com/world/us-world/article/after-the-fall-john-lanchester-on-the-decade-of-doom-that-followed-the-2008-financial-crash-cxscrmmj9}}</ref>

A rise in unsecured household debt added to questions over the [[Sustainability#Economic sustainability|sustainability]] of the [[economic recovery]] in 2016.<ref>{{cite news|url=https://www.independent.co.uk/money/is-britain-facing-a-debt-disaster-a6808086.html|title=Is the UK facing a debt disaster?|first=Simon|last=Read|date=13 January 2016|access-date=8 July 2016|work=Independent}}</ref><ref>{{cite news|url=https://www.theguardian.com/business/2015/dec/09/economic-recovery-reliant-consumer-debt-bcc-downgrades-growth-forecast|title=Recovery 'too reliant on consumer debt' as BCC downgrades forecast|date=9 December 2015|access-date=8 July 2016|first=Heather|last=Stewart|work=The Guardian}}</ref><ref>{{cite news|url=https://next.ft.com/content/5d6ecd5c-afc8-11e5-b955-1a1d298b6250|work=Financial Times|title=Economists' forecasts: Fears over balance of recovery|date=3 January 2016|access-date=8 July 2016|first1=Emily|last1=Cadman|first2=Chris|last2=Giles}}{{subscription required}}</ref> The BoE insisted there was no cause for alarm,<ref>{{cite news|url=https://www.telegraph.co.uk/finance/economics/12095431/Britains-recovery-is-not-driven-by-debt-says-Mark-Carney.html |archive-url=https://ghostarchive.org/archive/20220111/https://www.telegraph.co.uk/finance/economics/12095431/Britains-recovery-is-not-driven-by-debt-says-Mark-Carney.html |archive-date=11 January 2022 |url-access=subscription |url-status=live|title=Britain's recovery is not driven by debt, says Mark Carney|date=12 January 2016|access-date=8 July 2016|first=Mehreen|last=Khan|work=The Telegraph}}{{cbignore}}</ref> despite having said two years earlier that the recovery was "neither balanced nor sustainable".<ref>{{cite news|url=https://www.theguardian.com/business/2014/feb/12/interest-rates-economic-recovery-unsustainable|title=Interest rates on hold as Bank says recovery 'unsustainable'|date=12 February 2014|access-date=8 July 2016|work=The Guardian|first1=Larry|last1=Elliott|first2=Angela|last2=Monaghan}}</ref>{{efn|It was still very unbalanced,<ref>{{cite news|url=https://www.theguardian.com/business/2017/jan/01/uk-economy-will-fare-better-in-2017-than-forecasters-predict|title=Why the UK economy could fare better in 2017 than forecasters predict|first=Katie|last=Allen|date=1 January 2017|access-date=13 June 2017|website=The Guardian}}</ref> with [[Consumption (economics)|consumption]] accounting for 100% of growth in that year.<ref>{{cite news|url=http://www.newstatesman.com/politics/june2017/2017/04/economic-slowdown-another-reason-theresa-may-called-early-election|title=The economic slowdown is another reason Theresa May called an early election|first=George|last=Eaton|date=28 April 2017|access-date=8 June 2017|website=New Statesman}}</ref>}} Following the [[2016 United Kingdom European Union membership referendum|UK's 2016 decision]] to leave the [[European Union]], the BoE cut interest rates to a new historic low of 0.25% for just over a year. It also increased the amount of QE since the start of the Great Recession to £435bn.<ref>{{cite news|title=UK interest rates cut to 0.25%|url=https://www.bbc.co.uk/news/business-36976528|work=BBC News|date=4 August 2016|access-date=2 October 2016}}</ref> By Q4 2018 net borrowing in the UK was the highest in the OECD at 5% of GDP.{{efn|For comparison, Germany saved 9% of GDP and Russia saved 5%, while Japan, Greece, Spain, Italy and China saved between 1% and 3%.}} Households had been in deficit for an unprecedented nine quarters in a row. Since the Great Recession, the country was no longer making a profit on its foreign investments.<ref>{{cite news|url=https://www.ft.com/content/9afd1596-61d3-11e9-a27a-fdd51850994c |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/9afd1596-61d3-11e9-a27a-fdd51850994c |archive-date=10 December 2022 |url-access=subscription|title=UK's low national savings rate raises fear of trouble ahead|date=22 April 2019|first=Chris|last=Giles|website=Financial Times}}</ref> The Great Recession had a long term effect on UK's growth; GDP growth slowed from an annual average of 3.0% between 1993 and 2007 to 1.5% between 2009 and 2023, while labour productivity growth slowed from an annual average of 1.9% between 1993 and 2008 to 0.4% between 2008 and 2023. As of early 2024, average wages in the UK adjusted by inflation are roughly the same as in 2008.<ref name=":2">{{Cite web |last=Harari |first=Daniel |date=16 July 2024 |title=Low growth: The economy’s biggest challenge |url=https://commonslibrary.parliament.uk/low-growth-the-economys-biggest-challenge/#:~: |access-date=16 April 2025 |website=House of Commons Library}}</ref>

===2020 to present===
{{See also|Economic impact of the COVID-19 pandemic in the United Kingdom|2021–present United Kingdom cost of living crisis}}
In March 2020, in response to the [[COVID-19 pandemic in the United Kingdom|COVID-19 pandemic]], a temporary ban was imposed on non-essential business and travel in the UK. The BoE cut the interest rate to 0.1%.<ref>{{Cite news|url=https://www.bbc.co.uk/news/business-51962982|title = Coronavirus: UK interest rates cut to lowest level ever|work = BBC News|date = 19 March 2020}}</ref> Economic growth had been weak before the crisis, with zero growth in Q4 2019.<ref>{{cite web|url=https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihyq|title=Gross Domestic Product: Quarter on Quarter growth: CVM SA %|website=Office for National Statistics|date=31 March 2020|access-date=10 May 2020}}</ref> By May, 23% of the British workforce was furloughed (temporarily laid off). Government schemes were launched to help affected workers.<ref>{{cite news|url=https://www.theguardian.com/business/2020/may/04/over-a-fifth-of-british-employees-furloughed-in-last-fortnight|title=Nearly a quarter of British employees furloughed in last fortnight|first=Larry|last=Elliott|date=4 May 2020|access-date=11 May 2020|website=The Guardian}}</ref> In the first half of 2020, GDP shrank by 22.6%,<ref>{{cite news|url=https://www.theguardian.com/business/2020/aug/12/uk-economy-covid-19-plunges-into-deepest-slump-in-history|date=12 August 2020|website=The Guardian|title=Covid-19: UK economy plunges into deepest recession since records began|first=Richard|last=Partington}}</ref> the deepest recession in UK history and worse than any other [[G7]] or European country.<ref>{{cite news|url=https://www.ft.com/content/c8b172e2-8f70-4118-9e81-423e9a4b6839 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/c8b172e2-8f70-4118-9e81-423e9a4b6839 |archive-date=10 December 2022 |url-access=subscription |url-status=live|title=UK economy suffers worst slump in Europe in second quarter|date=12 August 2020|first=Delphine|last=Strauss|website=Financial Times}}</ref> During 2020 the BoE purchased £450 billion of [[government bonds]], taking the amount of quantitative easing since the start of the Great Recession to £895 billion.<ref>{{cite web|url=https://www.bankofengland.co.uk/monetary-policy/quantitative-easing|website=Bank of England|title=Quantitative Easing|access-date=16 April 2020}}</ref> Overall, GDP shrank by 9.9% in 2020, making it the worst contraction since the [[Great Frost]] paralysed the economy in 1709.<ref>{{cite news|url=https://www.ft.com/content/96e19afd-88b3-4e8d-bc3e-a72bd1f60d3c |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/96e19afd-88b3-4e8d-bc3e-a72bd1f60d3c |archive-date=10 December 2022 |url-access=subscription|title=UK suffers biggest drop in economic output in 300 years|date=12 February 2021|first1=Valentina|last1=Romei|first2=Chris|last2=Giles}}</ref>

In 2021 consumer price inflation (CPI) began rising sharply due to higher energy and transport costs.<ref>{{cite web|url=https://commonslibrary.parliament.uk/economic-update-economy-was-back-to-pre-pandemic-level-before-omicron/|title=Economic update: Economy was back to pre-pandemic level before Omicron|date=25 January 2022|first=Matt|last=Keep|website=House of Commons Library}}</ref> With annual inflation approaching 11%, the BoE gradually increased the base rate to 2.25% during the first nine months of 2022.<ref>{{cite news|url=https://www.theguardian.com/business/2022/sep/22/bank-of-england-interest-rate-rise-latest|title=UK in recession, says Bank of England as it raises interest rates to 2.25%|first=Richard|last=Partington|work=The Guardian|date=22 September 2022}}</ref> The UK was not alone: global inflation rates were the highest in 40 years owing to the pandemic and [[Russia's invasion of Ukraine]],<ref>{{cite news|url=https://www.ft.com/content/48d674a8-ae51-4f75-909c-0e5b6e38475c |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/48d674a8-ae51-4f75-909c-0e5b6e38475c |archive-date=10 December 2022 |url-access=subscription|title=Global economic warning lights are flashing red|author=The Editorial Board|work=Financial Times|date=16 October 2022}}</ref> though {{as of|September 2022|lc=on}}, the country had the highest domestic electricity prices and amongst the highest gas prices in Europe, contributing to [[2021–present United Kingdom cost of living crisis|a cost of living crisis]].<ref>{{cite news|url=https://www.ft.com/content/57c66a89-b046-4c3e-a8aa-d9099bd4da20|title=How do household energy bills compare across Europe?|first1=Alan|last1=Smith|first2=David|last2=Sheppard|work=Financial Times|date=7 September 2022|accessdate=22 December 2022}}</ref> In February 2022 the BoE began [[quantitative tightening]] (a reversal of QE) by not renewing mature government bonds and in November started offloading bonds to private investors,<ref>{{cite news|url=https://www.ft.com/content/64e5dcdd-42a8-4013-a3bd-75a62cf8e6dc |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/64e5dcdd-42a8-4013-a3bd-75a62cf8e6dc |archive-date=10 December 2022 |url-access=subscription|title=Bank of England begins selling bonds as it unwinds QE programme|first=Tommy|last=Stubbington|date=1 November 2022|work=Financial Times}}</ref> signalling the end to an era of easy borrowing.<ref>{{cite news|url=https://www.bbc.co.uk/news/business-63474176|title=Bank makes history as it reverses quantitative easing|first=Ben|last=King|date=1 November 2022|work=BBC News}}</ref><ref>{{cite news|url=https://www.theguardian.com/business/2022/nov/01/bank-of-england-begins-selling-government-bonds|title=Bank of England begins selling government bonds|date=1 November 2022|work=The Guardian}}</ref> In October 2022 year-on-year CPI was at 11.1%, the worst for 41 years, food price inflation was 16.2%, gas prices 130% and electricity 66%. 

In August 2023, the [[Office for National Statistics|ONS]] revised its analysis of Britain's economic performance and said that Britain's GDP had surpassed its pre-COVID-19 size in the final quarter of 2021, a much earlier recovery from the pandemic than previously estimated and ahead of other big European countries. The British economy was 0.6% larger in the fourth quarter of 2021 than in the final quarter of 2019, compared with an earlier estimate that it was 1.2% smaller.<ref>{{Cite news |last=Milliken |first=David |date=1 September 2023 |title=UK economy surpassed pre-COVID size in late 2021, new data shows |language=en |work=Reuters |url=https://www.reuters.com/world/uk/uk-statistics-office-revises-up-strength-post-covid-bounce-back-2023-09-01/ |access-date=2 September 2023}}</ref> The new Labour government elected in summer 2024 implemented the most significant enhancement of employment regulations in a generation. This included an increase in minimum wages and a wide array of rights.<ref>{{Cite web |date=2024-10-14 |title=Was Starmer's investment summit a success? |url=https://www.bbc.co.uk/news/articles/cvg3j30mly4o |access-date=2024-11-02 |website=BBC News |language=en-GB}}</ref><ref>{{Cite web |date=2024-10-10 |title=Government unveils significant reforms to employment rights |url=https://www.gov.uk/government/news/government-unveils-most-significant-reforms-to-employment-rights |access-date=2024-11-02 |website=GOV.UK |language=en}}</ref>