Investing in better healthcare a huge opportunity for UK

Global GDP could rise by about $12 trillion in 2040 if health investment can help reduce the number of health conditions suffered by the global population. A new study from McKinsey & Company has also suggested that the UK could boost GDP by more than $400 billion, if it were to invest in public health.

Over the past century, improved hygiene, better nutrition, antibiotics, vaccines, and new technologies, among others, have contributed to tremendous progress in global health – which in turn has boosted the global economy. Because improvements in health have extended lives, they have also oversee a rapid expansion of the labour force, and in turn bolstered productivity in the second half of the 20th century – key factors behind strong economic growth over that period.

Investment in healthcare in the coming period would therefore provide a much-needed shot in the arm to the economic recovery following the chaos wrought by the coronavirus pandemic. Illustrating this, according to a new report by McKinsey & Company, in 2017 alone, ill health cost $12 trillion in productivity – or roughly 15% of global GDP. The effects of the Covid-19 pandemic, such as the shelter-in-place measures to control the spread of the virus, are forecast to reduce global GDP by 3 to 8% in 2020 – showing that tackling ill health would essentially obliterate this difference.

Indeed, by McKinsey’s reckoning, global GDP could rise by about $12 trillion in 2040 – a boost of 8% – if health investment can help reduce the number of health conditions suffered by the global population, thus enabling expanded participation in the labour force. With the world’s businesses no longer able to count on exponential population growth to grow the labour market – labour force growth will likely slow from 1.8% over the last 50 years to 0.3% in the coming half-century – healthcare investment can help extend healthy lifespans for workers of prime working age and older.

At the same time, with demand for highly skilled knowledge workers increasing, advances in healthcare reducing disability-adjusted life year (DALY) impact on the younger population could help developing the physical and cognitive ability of children, the future labour force of the world. Healthier populations are also more resilient in the face of new infectious diseases, like Covid-19, that often present higher risks to people with existing health conditions – helping shield the world’s economy from being shunted into recession by future pandemics.

UK GDP boost

In the report’s summary, its authors stated, “Health has not typically been part of economic growth discussions, especially in developed countries where the recent debate has revolved around the cost of healthcare, with a few exceptions… Investments in health could also play an important role in promoting economic recovery in the wake of the Covid-19 pandemic.”

In fact, the economic benefits of a healthy public have been part of political debate for the best part of a century. In the UK, for example, proponents of the Beveridge report in the 1940s attempted to draw support from tax-paying business owners for the creation of the NHS by claiming – accurately – that a healthier workforce would pay for itself, as public healthcare would ultimately boost the productivity of boss’ staff. However, following four decades of neo-liberalism and austerity – as well as the continued demonisation of ‘socialised’ healthcare in the US, it is a point which has been significantly marginalised in recent years.

Interestingly, the UK’s public health institution, the NHS has been ravaged by a decade of spending cuts, which left it woefully short-staffed and under-resourced when the Covid-19 pandemic hit. That austerity campaign was undertaken under the guise of economic prudence – as the UK Government sought to pay off a colossal bail-out for the financial system after the last recession it claimed that Britain simply could not afford to maintain its welfare spending as it was then, including its commitments to healthcare funding.

McKinsey’s analysis suggests that strengthening healthcare investment in the UK would actually place Britain’s economy in a significantly stronger position, though. By boosting the additional healthy life years of people aged around 60 by just 0.4 years, for example, the UK could stand to see its GDP boosted by $132 billion by 2040. At the same time, a minimal improvement of healthy life years for those aged 30 of 0.3 by 2040 could see $43 billion added to the national GDP. Overall, Britain could reap a $401 billion GDP windfall from boosted public health, representing $800 billion in welfare gains, and a 3.4x return for every $1 invested.