As good as it gets? - The forces driving economic stagnation and what they mean for the decade ahead

But the seeds for the devastating impact of this crisis were sown by a slump in growth that is unprecedented in the post-war period: average growth in GDP per capita in the 15 years to 2019 was the lowest for any such period since the 1930s, with the level of per capita GDP around 20 per cent below the pre-financial-crisis trend, equivalent to around £10,000 per person in the UK by the end of 2021. [...] The impact of the cost of living crisis makes the importance of returning to growth clear The seeds for the devasting impact of the cost of living crisis were sown by a growth slump that is unprecedented in the post-war period. [...] But, as shown in Figure 1, average growth in GDP per capita in the 15 years to 2019 was the lowest for any such period since the 1930s.1 The scale of this problem is enormous: the level of GDP per capita is around 20 per cent below the pre-financial crisis trend, equivalent to around £10,000 per person in the UK by the end of 2021 (Figure 2). [...] Household incomes have 1 This begs the question: what led to the end of the similarly crisis-filled period of low growth in the 1930s? Studies of the end of the Great Depression focus on changes in the regime for fiscal and monetary policy with much looser policy appearing to play a decisive role in driving a significant recovery. [...] Again, however, while this fits the broad type of driver of slowing growth we are looking for, the pattern of rapid growth in the aftermath of the financial crisis followed by a sharp fall thereafter does not match the pattern of UK growth which did not recover in the same sort of way in the aftermath of the financial crisis.