Remarkable immigration has not made Britons richer; rather, it has concealed a serious productivity deficit, according to the eminent research tank Resolution Foundation.

Record Immigration Amounts and Economic Stagnation in Britain

The biggest population expansion in a century has supported the UK economy since 2010, adding six million new residents, with immigration accounting for three-quarters of this increase.

Despite this, the Resolution Foundation has noted that Britain's ‘poor growth performance’ since the Conservative party came to power has done little to improve GDP per head.

Economists believe that GDP per head is a more accurate indicator of living standards, as it takes account of population growth.

Their analysis revealed that GDP per capita has grown by just 4.3% over the past 16 years, in stark contrast to the 46% growth recorded over the previous 16 years.

The end of a decade-long jobs boom has highlighted the UK's ‘exceptionally poor’ productivity performance since the 2008 financial crisis.

The Resolution Foundation, known for its left-leaning stance, has pointed out that average annual productivity growth of just 0.4% over the past 16 years is the lowest for almost two centuries, leaving average wages at more than £14,000 below their pre-crisis level.

Meanwhile, the Institute for Fiscal Studies (IFS) has found that soaring debt interest and rising welfare bills under Rishi Sunak have led to the biggest expansion of the state ever by a post-war Conservative government.

The IFS predicts that the state will remain larger than pre-pandemic levels due to the pressures of an ageing population and geopolitical tensions.

Sunak has already pledged to increase defence spending from 2% to 2.5% of national income, a policy that Labour also supports as an ‘aspiration’.

Future Economic Outlook

According to the think tank, the UK's overall growth in the 2010s was ‘largely fuelled by an employment boom’, with peak employment of 76.1% before the pandemic.

That boom has now turned into a crisis, with a shrinking workforce and rising inactivity due to long-term illness, revealing the UK's poor productivity record. Productivity is key to keeping prices stable and wages rising.

The Resolution Foundation has described the UK's growth since 2010 as ‘solid, if unspectacular’ compared to other rich countries, with average annual output of around 1.5% between the end of 2009 and the end of 2023.

This performance is better than that of Germany and France, but still below that of the United States and Canada. The study also notes that Germany's growth has stagnated over the decade, and that this weak performance is likely to continue as the country moves away from cheap Russian energy.

Long-Term Economic Challenges

The Resolution Foundation has warned that the UK's employment miracle is unlikely to continue, with the International Monetary Fund predicting that the UK will outperform its European counterparts in the medium term. I

t predicts that the number of hours worked will not increase as rapidly over the next Parliament, as population growth is offset by a higher proportion of jobs being filled by groups that typically work shorter hours, such as women and young people, and by an older workforce that is less likely to be employed.

Greg Thwaites, Research Director at the Resolution Foundation, said: ‘The economy is at the heart of the election campaign, and the UK's economic performance has been average when it comes to GDP growth. But beneath this ‘average’ position lie major strengths and weaknesses that are key to the UK's future economic performance."

He added: ‘Britain's average growth has been underpinned by a booming population. The country's six million extra people have certainly helped the economy grow, but they have done little to increase GDP per head. In fact, the UK's record on productivity - which is really important for living standards - is exceptionally poor."