UK GDP growth alone does little to help 'have-nots'

08 May 2018 Authored by Consultancy.uk

The focus by politicians and economists on GDP growth could be skewing perceptions of what a successful society is, neglecting the material impacts of wealth, or its absence, on social and normative values, health, wellbeing and community. If wealth is inadequately distributed, however, it only tends to boost the quality of life of wealthier communities, while poorer areas are often deprived of these aspects of a happy life, suggesting that a growth-at-any-cost approach could actually be holding back society.

A myopic focus on GDPR growth is often criticised as neglecting negative long-term consequences of actions geared toward short-term economic boosts. One example currently at the top of many minds is the fervour with which businesses are approaching automation and AI. While this technology promises to save a great deal of time and money for businesses, it could cost as many as a third of workers in London their jobs alone, with no central plan to help these people survive such a massive economic realignment.

Elsewhere, plastic is increasingly becoming a threat to marine ecosystems, as the cheap and versatile material has become a staple in the packaging of fast-moving consumer goods, to maximise profitability of manufacturers. With a host of similar stories coming to a head, the world is faced with the prospect of global systemic collapse, should businesses and governments fail to adapt their practices to a more sustainable model. A new report from Grant Thornton aims to expand the criteria for human advancement beyond economic metrics, such as GDP, with the document quoting Robert F. Kennedy, “Gross National Product measures everything in short, except that which makes life worthwhile.”

Vibrant economy metrics

The report considers six key metrics in the definition of a vibrant economy, these include prosperity, a nod to growth, but also dynamism and opportunity; inclusion and equality; health, wellbeing and happiness; resilience and sustainability; and community, trust and belonging. Of key note is that it is a complete package that the firm aims for, not the maximisation of one myopically with disproportionate consequences for others. The data covers 324 authorities across England, with Wales and Scotland not within the scope of the current analysis.

Interestingly the analysis finds that inclusion and equality are not correlated with prosperity, with no line of best fit between the regions and their respective scores. However, when comparing inclusion and equality with health, wellbeing and happiness scores, a relatively strong correlation is noted, with improvements in one boosting improvement in the other. Correlation does not mean causation, with high levels of inclusion noted particularly in rural areas, which are themselves noted as also offering better amenities tailored for health, wellbeing and happiness than city life.

Correlations between key indicators

The areas of top performance were Cambridge and the London boroughs of Camden and Westminster – key cultural and economic hubs. Other areas also noted for strong performances include Wokingham, Windsor and Maidenhead, Oxford, Guildford and Winchester. The broad expanse of vibrancy in the middle and west of England reflects the wide array of areas that are performing strongly, even in areas less well off than the sought.

To have and have not

Areas of standout performances, the firm notes, include Warwick, Rushcliffe and Stratford-on-Avon in the Midlands; Cheshire East in the North West; and York in Yorkshire and Humber. No single factor could be directly found to give rise to areas of vibrancy, although there are correlations between factors. One of these factors is summed up when considering the concept of community, trust and belonging. This measures in how far people feel connected to their local community.

Community, trust and belonging

Interestingly, in order to assess this, Grant Thornton did not directly poll residents – rather, analysing key measures including voter turnout, crime levels, measures of isolation and diversity. This may be why Kensington and Chelsea was found to be one of the leaders in the field – despite class divisions being rife in the borough. While the council is also home to some of the UK’s wealthiest residents, 71 people lost their lives in the Grenfell Tower fire last year, after local authorities had failed to fit sprinklers as a cost-saving measure. Across the rest of London, while concern grows around crime, the city still scored a broadly positive performance in community, trust and belonging.

In the South East, Oxford stands out – bolstered by the community that comes with academic life and rural life. The South West and West Midlands each have performances skewed to the top end for the region. Elsewhere, the North East in particular received a relatively poor showing, with only Newcastle upon Tyne above the index score of 100. As one of the poorest regions in the UK, this would suggest that while a vibrant economy in the future could better distribute wealth to boost happiness, health and community, it shows at present those without wealth are likely to be those deprived of other key elements which can boost quality of living.

Overall then, while Grant Thornton has pointed out that ‘wealth’ is not the be all and end all of a dignified and comfortable life, the areas which perform best in terms of community trust, happiness and health and wellbeing tend to have the greatest share of GDP. If the UK is to address quality of life adequately in the future, then, it would need to look into ways of addressing the uneven distribution of wealth across the country, rather than continue to depend on the trickle-down of economics of old.

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