16 November 2020

The UK has huge strengths – but we cannot take our prosperity for granted


We are living through an extraordinary moment. None of us was expecting 2020 to look like this. It is a moment that will challenge our principles and decision-making, and reveal what we really believe. In order for the UK to emerge more prosperous from this time of change, we need to draw strength from our history and our national character and hold on to the values that protect and build prosperity. 

Around the world, Covid-19 is placing enormous constraints on prosperity and testing all countries’ institutional, economic, and social resilience. The virus, and national efforts to contain it, are impacting not just our health, but also our jobs, our children’s educations, and our relationships with each other and with the state.

In amongst all this, there is some positive news. The 2020 Legatum Prosperity Index highlights that, prior to the pandemic, global prosperity had risen continuously over the previous decade and reached a record high. This was driven by improved health, education, and living conditions, and more open economies around the world.

There is never a good time for a global health crisis, but if there has to be one, the progress that has been made over the last decade means emerging nations are in a better position to tackle it.

However, the Index also shows that the rate of improvement in global prosperity had slowed, due to stagnation and decline in historically successful nations. Across the Asia-Pacific region, safety and security, personal freedom, economic quality, and education all deteriorated over the last 12 months. At the same time, the quality of the investment environment and enterprise conditions in western Europe and North America are starting to falter.

This global trend is reflected in the UK, where prosperity has deteriorated over the last few years, showing we must not take it for granted. We must beware the trap of falling into the mindset of an overdeveloped society, vulnerable to entitlement and complacency. 

While the UK’s hard economic and social data remains strong, our report shows that perceptions are less positive. People say they are dissatisfied with a number of aspects of life, and there are serious concerns about the nation’s economic future.

This is expressed through public confidence in government falling from 42% last year to 34%, the second lowest level in 14 years; weaker family relationships and social networks; reduced tolerance towards others in society; and a greater proportion of the public experiencing housing and food insecurity. 

At the same time, business experts are expressing less confidence that property rights and intellectual property will be protected. They voice concern that the labour market is becoming less flexible, in particular around hiring practices and wage determination, and that customs clearance processes could become less efficient, which is a particular concern as the UK negotiates trade deals.

Changing the confidence trajectory of the UK, and other developed countries that are starting to falter, will be critical to creating stronger economies and more prosperous societies following the disruption of the pandemic. 

Developing nations that are charting a pathway from poverty to prosperity are able to look to other countries who have created well-worn paths. There are national leaders who can share their experiences, and books and seminars that can provide invaluable advice.

But nations at the top of the Index, such as the UK, have no such examples to follow. Each generation is taking steps into the unknown, creating something that does not yet exist. This requires leadership, vision, and courage. It requires an environment that values innovation and creativity, that celebrates the one who tries, even if they don’t succeed. It requires harnessing the entrepreneurial, risk-taking spirit of the British people.

The good news is that the UK is in a strong position to rebuild its prosperity. The Index shows that, prior to the pandemic, the UK was the 13th most prosperous country in the world. We enjoy some of the highest living standards in the world, with access to quality healthcare and world-leading higher education institutions, and our economy is still one of the most dynamic and enterprising around. 

We are living through challenging times, but we must not focus solely on the immediate crisis or we will limit our future prosperity. Never has it been more important for the country’s leaders to recognise the holistic nature of true prosperity and make strategic choices to further build an inclusive society with an open and thriving economy, and to improve the lives of all our citizens.

The UK has an incredible history, and we have shown time and time again our resilience and ability to survive difficult times and emerge more prosperous. This is the time to lay the foundations for the nation we will be in the future and will leave as a legacy for future generations.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Philippa Stroud is CEO of the Legatum Institute.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.