ALEX BRUMMER: Inactivity in the workplace costs us dearly

BBC presenter Huw Edwards is far from alone dealing with mental health problems.

In its latest report on the outlook for UK public finances, the independent Office for Budget Responsibility (OBR) addresses the rise in mental health problems, arguing that it is responsible for half of the increase in medically related withdrawals from the workforce since the pandemic.

The overall health-related inactivity of the workforce rose to 440,000 in the three months to April 2023 and now exceeds the post-Covid level of 350,000.

There are as many as 2.6 million people of working age (6.1 percent of the population) who are out of the workforce for medical reasons.

The consequences are terrifying for the next residents of 10 Downing Street.

It will contribute to chronic labor shortages (there are still 1 million vacancies), it will push up workers’ wages and make the fight against inflation more difficult.

Ill health will add £6.8bn to social bills in fiscal year 2023-24 and deprive the HMRC of £8.9bn in tax revenue.

In what may come as a shock to ginger groups demanding more money from the state coffers, the OBR suggests that the generosity of the benefits system, from universal credit to disability and other benefits, has made it easier to sit on the couch or walk the dog. then face meager income growth.

The combination of hefty NHS waiting lists – notable doctors beware – and an overly generous and easily accessible benefit system means that working for large slugs of the population no longer pays.

The OBR fiscal report as a whole will not be very encouraging for Labour. It’s fine for Sir Keir Starmer to promise fantastic new green jobs, but if economic inactivity continues, none will be there unless the doors open for large-scale migration.

Looking at the OBR budget scenarios, it’s easy to see why Labour’s shadow chancellor Rachel Reeves is committed to an iron grip on spending.

The UK is facing a triple blow: an aging population, lost fuel duties as the electric vehicle revolution gains momentum, and higher defense budgets as tensions flare in Europe and the Pacific.

All hopes for a reduction in the current level of debt, almost 100 percent of total output and the highest in 60 years, look bleak.

The solution is to grow the economy by making investment and entrepreneurship more attractive by cutting taxes – and by delivering on post-Brexit commitments of groundbreaking free trade agreements with the world’s fastest growing economies.

Why are we waiting?

Home truths

Barriers to housing construction in the UK should never be underestimated, which is why successive governments fail to meet ambitious targets.

No doubt Sir Keir will suffer the same fate, even if he manages to break planning barriers and concrete across the green belt.

In the late 1950s and 1960s, Macmillan Tories managed to hit targets because of the German gift of bomb sites and the birth of tower blocks, many of which later became dysfunctional.

Just how persistently problem housing has become is evident in the update from our largest home builder, Barratt.

By historical standards, mortgages are no more expensive than they were before the great financial crisis of 2008 and well below that of the late 1980s and early 1990s.

Even with the withdrawal of the best buying solutions, the deals on offer are infinitely greater than when former construction associations dominated.

The headlines about sky-high fixes for two years now that the Bank of England has raised interest rates have served as a behavioral barrier.

New buyers withdrew 32 percent from Barratt in the year to June. It is not clear that this was the intention of the Bank of England.

It hoped to put pressure on consumers, but May’s GDP figure, down 0.1 percent, and June’s buoyant retail sales show limited impact.

Instead, Barratt backtracks and stocks fall across the industry. Not a great result.

Sterling bonus

In the great battle against inflation, the Bank of England has a new weapon.

Sterling has moved up from a low of $1.03 against the dollar to $1.31 in last trading as traders support Britain’s resilience and the prospect of higher interest rates.

A stronger exchange rate means cheaper imports, especially oil and gas – all priced in dollars. Forward and up.