The UK is rich – so why doesn’t it feel like it?

By most measures, the UK is still one of the wealthiest countries on Earth.

It remains home to world-class universities, one of the world's biggest financial centres, globally competitive industries and a services sector that still punches far above its weight.

Which raises an obvious question: if the UK is still rich, why does life here increasingly feel so strained?

Why do wages feel stuck, public services exhausted, housing unaffordable and the national mood so bleak that one Mail on Sunday columnist recently suggested young people should "leave while they still can"?

The old phrase "the sick man of Europe" has even started doing the rounds again.

In the 1970s, this referred to strikes, inflation and industrial decline. But in 2026, the diagnosis is much more complicated.

One of the UK's biggest problems is productivity: getting more output from the same amount of work. 

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The UK is growing, but slowly

The first test is simple: are we actually getting richer?

In total, yes. The International Monetary Fund expects the UK economy to grow by around 0.8% in 2026 measured in real terms. That puts us behind the United States, which the IMF expects to grow by around 2.3%, and slightly behind the Euro Area, at around 1.1%.

Not uniquely dreadful on headline growth, but hardly setting the pace among rich economies either.

Forecasts suggest some modest improvement from 2026 onwards. The IFS expects real household incomes to grow by around 1.1% a year over the next five years – worth roughly £400 a year, or about £33 a month, for a typical UK household.

With a shovel and a spade and… that's all they gave us

The much deeper problem is productivity: how much value the economy produces for each hour worked.

This is the bit that sounds boring until you realise it helps explain why wages have been so miserable.

If workers produce more per hour, companies can usually pay more without simply passing the cost on through higher prices. If not, it becomes a treadmill: wages go up, prices follow, and nobody's actually better off.

If productivity barely grows, wage growth becomes a fight over the same small pie.

Before the financial crisis, the UK was doing well on this measure. Between 1997 and 2007, output per hour grew at the second-fastest rate in the G7. Then the engine stalled. Between 2009 and 2019, the UK fell to the second-slowest rate in the G7.

This leaves us trailing behind other rich economies like the US, France and Germany, which produce 23%, 18% and 10% more per hour than British workers.

One reason is that the UK has been better at adding workers than it has at adding the tools, machinery, software and infrastructure to help workers produce more. Economists call this "capital deepening". In plain English, it means giving workers better kit.

Put another way: a UK worker and a French worker can put in the same shift, but the French worker is likely to produce significantly more – not necessarily because they're trying harder, but because they've been given the right tools.

In fact, an analysis by LSE found that roughly half of productivity slowdown since the financial crisis can be traced directly to this failure to invest.

Part of the explanation is simply that the UK has been a chaotic place to do long-term business.

Since 2010, the UK has cycled through eleven different secretaries of state for business. Add six prime ministers, a referendum that upended the UK's trading relationship with its biggest market, and a mini-budget that briefly sent the pound into freefall, and it's not hard to see why companies have been reluctant to commit to big long-term investments.

When the rules keep changing, the only rational response is to "wait and see".

Weak wages, expensive homes, poorer families

This is where weak productivity stops being an economist's chart and starts becoming a household problem. If a country produces less per hour than its peers, there's less room for wages to rise without creating inflation.

The UK has been living with that problem for years.

In 2024, average real weekly earnings were just £16 higher than in 2010, according to the Resolution Foundation. Had pay growth matched Germany and the US over the same period, average wages would have been around £3,600 a year higher.

Housing then takes a difficult wage story and makes it worse.

In England, nearly three-quarters of low-income renters spend more than 30% of their pay on rent in 2023-24. In London, that rises to virtually everyone. For low-income renters, a wage is not really a wage until the landlord has finished with it.

The worst pressure is concentrated in places where low wages, high rents and weak local labour markets collide – a pressure that hits families hardest.

Across the UK, more than two in three constituencies have child poverty rates above 25%, once housing costs are factored in.

London shows that wealth creation alone is not enough.

Even with deep labour markets and even deeper pockets, 81% of constituencies still clear that threshold, because high wages don't help much when housing costs take a bite so big it would make the shark from Jaws look positively restrained.

And it's a similar story for homeowners.

Years of rising prices mean the house-price-to-income ratio has more than doubled since the 1990s, meaning most people can't afford the kind of home their parents bought at the same age. Put together with rising rents, one in three people aged 25-44 believe they'll never be able to afford their own home.

This time, the "sick man" bit isn't just a metaphor

In 2026, the decades-old analogy lands differently because ill health has moved from the margins of the economic debate to the centre of it.

With more working-age people outside the labour force because of long-term sickness, NHS waiting lists still huge, mental health problems rising among younger adults, employers facing higher sickness absence and the welfare bill climbing, the UK's health problem has become part of its growth problem.

Around 2.8 million people are currently economically inactive because of health conditions, up by around 800,000 since 2019. Without action, experts reckon that figure could rise by another 600,000 by 2030.

All in all, it's thought that the wider cost of ill health is around £212 billion per year once lost output, welfare payments and pressure on the NHS are included.

For scale, that's bigger than some estimates of the direct infrastructure damage Russia has inflicted on Ukraine in over four years of war.

Employers are also paying for the problem, with sickness absence reportedly at a 15-year high and costing businesses an estimated £85 billion a year.

The causes are messy. Long Covid is part of the picture, but not the whole explanation.

Mental health problems, musculoskeletal conditions, NHS backlogs, disability, waiting times, workplace stress and an ageing workforce all feed into the same problem. There are also millions of people still in work with health conditions that limit what they can do.

Labour market health indicator	Latest figure
Economically inactive, aged 16 to 64	~9.0 million
Economically inactive due to health conditions	2.8 million
Young people not in education, employment or training	957,000, or 12.8% of people 16-24
Employer cost of poor workplace health	£85bn a year

And the sickness bill doesn't stop at the hospital door. It shows up in lower tax receipts, higher benefit spending, weaker output and more pressure on the NHS – which is exactly why the health story leads directly into the fiscal one.

The state is taxing more – and still running short

Taxes are high, public services feel strained, and the government is still spending more than it raises like a student with an overdraft, a taste for bottomless brunch, and a vague plan to sort it out at some point after graduation.

The Office for Budget Responsibility – the government's independent fiscal watchdog – expects the public sector to raise around £1.2 trillion this year, equivalent to roughly £43,000 per household. Overall, tax as a percentage of GDP is on course to be the highest since 1945.

But it expects to spend £1.368 trillion – about £48,000 per household – leaving a borrowing gap of around £133 billion.

The state is collecting more, spending and borrowing more, and still failing to create the feeling that the country is being properly maintained.

That would be difficult enough if the pressures were temporary. The problem is that the UK's spending needs are being pushed up by forces that do not disappear after the next Budget.

The most important is demographics: an older population, fewer births, more pension spending, more healthcare demand and a smaller future workforce to help pay for it.

The grey tidal wave of an ageing population

The UK is ageing, with deaths projected to exceed births from mid-2026.

The population is still expected to grow, from 69 million in mid-2024 to 71 million by mid-2034, but that growth now depends on net migration.

That creates a difficult political bargain. Workers are needed to support an older population, but the extra workers also need homes, transport, schools, GP appointments and infrastructure.

A country that struggles to build enough of those things then turns migration from an economic necessity into a political pressure cooker.

UK demographic projection	2024	2034	2049
Total population	69.3m	71.0m	72.4m
People of pensionable age	12.4m	14.2m	15.3m
Children under 16	12.6m	11.0m	10.5m
People of pensionable age for every 1,000 people of working age	280	310	329

Which is where the problem gets circular. The UK needs more workers to support an ageing population, but it hasn't built the homes, transport and infrastructure needed to absorb them without making everyone angrier.

Paperwork fortresses, but nowhere to live

The government has set a target of 1.5 million new homes by 2030, which implies building roughly 300,000 homes a year. In the 12 months ending June 2025, England completed around 201,000.

That gap turns up in rents, house prices, wage demands, commuting times, delayed family formation and the depressing spectacle of adults with full-time jobs living like undergraduates with better pans and fewer raucous parties.

The planning system gets blamed because it's slow, under-resourced and unpredictable.

The UK has made it unusually difficult to build the boring foundations of prosperity: homes, labs, factories, warehouses, rail links, grid connections and energy projects.

But the planning system isn't the only problem. Building a home has got significantly more expensive – materials, labour, compliance costs have all risen sharply. At the same time, weakened household finances, high mortgage rates and the cost of living squeeze mean there are fewer people who can afford to buy.

This means developers face a simple calculation: if they can't sell enough homes at a high enough price to cover their costs and make a profit, they won't build. And increasingly, they aren't.

And it's a problem that hits wider infrastructure, too. HS2 captured the national talent for turning construction into paperwork, with its Environmental Statement alone running to 50,000 pages.

Laid end to end, 50,000 A4 pages would stretch for almost nine miles: enough paper to reach from Westminster to Wembley – yet somehow not enough railway to get to Manchester.

Originally costed at £33 billion for a full network reaching Manchester and Leeds, the estimated cost of just the London to Birmingham stretch ballooned to around £68 billion, with the northern leg being cancelled entirely.

The wounded giant case

So is the UK the sick man reclining passively in its hospital bed, waiting for the sweet release of another morphine hit? Or is it a wounded giant, battered and limping, but still capable of roaring back into action?

We may be ailing when judged by living standards, health, housing, public services and productivity. Yet areas of genuine global strength still remain: financial services, universities, life sciences, artificial intelligence, clean energy and high-value services exports.

Start with financial services. The UK remains the world's largest net exporter of financial services, generating a trade surplus of around $127 billion (£102 billion) in 2024, ahead of the United States at $64.2 billion (£51 billion).

London still hosts more than 160 foreign banks or branches, and the UK, overwhelmingly through London, accounts for roughly 38% of global foreign-exchange turnover.

That is not dewy-eyed nostalgia. Even if the national mood sometimes suggests Britain's main export is memes about lettuces outlasting prime ministers, the hard data tells a more uplifting story.

Sector	UK value / rank	Global comparison
Financial services trade surplus	$127bn (£102bn)	1st globally
FinTech investment	$3.6bn (£2.8bn)	2nd globally, after the US
Pharmaceutical R&D	0.32% of GDP	3rd among 16 countries with available data, behind Switzerland and Belgium
Life sciences FDI	£2.1bn	4th amongst 18 comparator countries

Services now account for 58.8% of UK exports, and UK services exports to the EU were 19% above their 2019 level in real terms in 2024, despite the friction created by Brexit.

Goods trade has had a rougher ride, but the UK's professional, financial, creative and digital services have proved harder to kill than many expected.

This is where we need to separate "UK: the household experience" from "UK: the export platform". A commuter trying to rent in London, book a GP appointment and pay a marginal tax rate designed by a sadist may reasonably feel the country is broken.

A global company looking for legal services, finance, research talent, English-language universities, biotech clusters or artificial intelligence infrastructure may see something else entirely.

Between 2022 and 2025, McKinsey found that the UK was the world's third-largest destination for newly announced foreign direct investment projects, behind only the US and India, with around £64 billion flowing in each year – about 40% more than before the pandemic.

A large chunk of that money has gone into clean energy, software and artificial intelligence infrastructure. Microsoft's planned £22 billion supercomputer project and Nvidia's £11 billion investment in artificial intelligence "factories" point to a country that still has a plausible claim to being one of Europe's main technology hubs.

Bottom line

The UK looks unusually weak on productivity growth, living standards, housing costs, long-term sickness and fiscal pressure.

But the country remains too rich, too globally connected and too strong in finance, services, universities, life sciences and technology to be written off just yet.

The UK is not a sick man waiting for the last rites, but rather a wounded giant, still carrying enough muscle mass to hit above its weight, but sick enough in wages, housing, health, taxes and public services for many households to feel as though the only exit left is Heathrow.

The deeper question is whether anyone is willing to treat the underlying condition rather than simply manage the symptoms.

Because the UK still has the wealth, talent and institutions to recover. What it has lacked, for much of the past two decades, is the courage and long-term thinking needed to actually fix the problem.

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