Daily Junction.mobi portalBusiness · August 1, 2026 · The Conversation · 17 min
How finances and the economy have changed over 25 years.
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<span><a href="https://theconversation.com/profiles/abigail-taylor-1314328">Abigail Taylor</a>, <em><a href="https://theconversation.com/institutions/university-of-birmingham-1138">University of Birmingham</a></em>; <a href="https://theconversation.com/profiles/john-colley-198288">John Colley</a>, <em><a href="https://theconversation.com/institutions/warwick-business-school-university-of-warwick-2650">Warwick Business School, University of Warwick</a></em>; <a href="https://theconversation.com/profiles/kenneth-gibb-104086">Kenneth Gibb</a>, <em><a href="https://theconversation.com/institutions/university-of-glasgow-1269">University of Glasgow</a></em>; <a href="https://theconversation.com/profiles/mike-savage-2516678">Mike Savage</a>, <em><a href="https://theconversation.com/institutions/london-school-of-economics-and-political-science-1219">London School of Economics and Political Science</a></em>, and <a href="https://theconversation.com/profiles/steve-schifferes-181051">Steve Schifferes</a>, <em><a href="https://theconversation.com/institutions/city-st-georges-university-of-london-1047">City St George's, University of London</a></em></span>
<p><em>In this second part in <a href="https://theconversation.com/uk/search?q=britain%27s+quarter+century">our series</a> on how the UK has changed in the past 25 years, we look at the finances of both the nation and individuals, before turning to housing and business.</em> </p>
<h2>The economy</h2>
<p><strong>Steve Schifferes, honorary research fellow, City St George’s University</strong></p>
<p>For most of the 2000s the economy grew strongly, raising living standards and allowing the government to invest more in public services such as the NHS. This was the “NICE” decade, an acronym coined by former Bank of England governor <a href="https://www.bankofengland.co.uk/-/media/boe/files/speech/2003/east-midlands-development-agency-dinner">Mervyn King</a> to describe a long period of “non-inflationary, continually expanding” growth – in contrast to previous decades of “boom and bust”. </p>
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<p><em>How has the UK changed since the start of the century? From Blair to Burnham, from the dotcom era to AI agents, time has certainly not stood still. In this six-part series, a team of some 35 experts look at everything from defence spending to species populations to the rise of populism to try and make sense of the intervening years.</em></p>
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<p>In contrast, the period since the 2008 global financial crisis has been characterised by low growth, static real incomes and a growing government debt burden – all exacerbated by the COVID pandemic and the energy supply crisis caused by the Ukraine war.</p>
<p><strong>UK GDP 1990-2025</strong></p>
<figure class="align-center zoomable"> <a aria-label="Zoomable image" href="https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=45&auto=format&w=1000&fit=clip"><img alt="UK GDP chart 1990-2025" src="https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=45&auto=format&w=600&h=213&fit=crop&dpr=1 600w, https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=30&auto=format&w=600&h=213&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=15&auto=format&w=600&h=213&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=45&auto=format&w=754&h=268&fit=crop&dpr=1 754w, https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=30&auto=format&w=754&h=268&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/735272/original/file-20260512-57-sturfn.png?ixlib=rb-4.1.1&q=15&auto=format&w=754&h=268&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a> <figcaption> <span class="caption"></span> <span class="attribution"><a class="source" href="https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihyp/pn2">Office of National Statistics</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span> </figcaption> </figure>
<p>Underlying the deterioration in Britain’s economic performance since 2008 has been a sharp fall in the rate of productivity, meaning the amount of output produced per worker. Falling productivity reduces output for the same number of workers, which brings down both GDP and real incomes. </p>
<p>In the first decade of the 21st century, UK productivity grew at 2% per year, with the economy expanding by 2.5%-3% annually – this was the culmination in a long period of strong productivity growth driven by everything from North Sea oil to corporate investment in IT and the internet. Since 2008 productivity on average has increased by 0.4% per year, and economic growth has fallen to an average of just 1.5% per year. If productivity had continued to grow at its pre-2008 rate, the average British household would be £18,000 better off today. </p>
<p><strong>UK productivity 1990-25</strong></p>
<figure class="align-center zoomable"> <a aria-label="Zoomable image" href="https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=45&auto=format&w=1000&fit=clip"><img alt="Chart showing output per hour worked, % change per year." src="https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=45&auto=format&w=600&h=218&fit=crop&dpr=1 600w, https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=30&auto=format&w=600&h=218&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=15&auto=format&w=600&h=218&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=45&auto=format&w=754&h=273&fit=crop&dpr=1 754w, https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=30&auto=format&w=754&h=273&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/735274/original/file-20260512-57-9mz6m6.png?ixlib=rb-4.1.1&q=15&auto=format&w=754&h=273&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a> <figcaption> <span class="caption">Output per hour worked, % change per year.</span> <span class="attribution"><a class="source" href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/timeseries/lzvd/prdy">Office of National Statistics</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span> </figcaption> </figure>
<p>Underlying this weakening productivity has been low levels of investment in infrastructure by both the private and the public sectors. This includes both physical investment in plant and equipment, as well as transport and energy, but also investment in training. </p>
<p>Despite prioritising <a href="https://labour.org.uk/updates/press-releases/keir-starmer-speech-at-labours-business-conference/">improving productivity</a>, there is little evidence that Keir Starmer’s Labour government managed to tackle this shortfall, at least in the short term.</p>
<p><strong>Debt and spending</strong></p>
<p>The stronger performance of the economy before 2008 allowed the government to boost spending while limiting tax rises and keeping the public debt below 40% of GDP. This changed after the financial crisis: government debt rose to 60% as it pledged over £1 trillion to bail out the collapsing financial sector. </p>
<p>Debt increased further to 80% during the COVID pandemic when the government spent £400 billion to subsidise wages, and has since kept on rising to 95% of the size of the economy – £2.9 trillion. This means the government is now paying out more in debt interest than it spends on any other service except the NHS.</p>
<p><strong>Net debt as a % of GDP</strong></p>
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