Britain is no longer considered a rich country after 15 years of devastating economic stagnation that has left millions worse off than people living in former Eastern Bloc nations, according to shocking new research.
The brutal assessment comes from the respected National Institute of Economic and Social Research, which found that parts of Birmingham and the north east of England are now poorer than the most deprived regions of Slovenia and Lithuania, countries that sat behind the Iron Curtain just three decades ago.
It’s a staggering fall from grace for a nation that once ruled the largest empire in history and dominated global trade for centuries. But the numbers don’t lie, and they paint an absolutely grim picture of Britain’s economic decline.
The Question That’s Now Hard to Answer
Max Mosley, an economist at NIESR, put it bluntly: “Economic stagnation over the past decade is now threatening the UK’s position as a place for a high standard of living.”
He added that the question of whether Britain remains a rich country, “which was easy to answer for centuries, is now less straightforward.”
Let that sink in. For hundreds of years, asking if Britain was wealthy would have seemed absurd. Now? Not so much.
The typical British worker would be earning £4,000 more per year if the UK’s productivity and wage growth had simply matched America’s over the past 15 years. That’s not asking for miracles, just keeping pace with our closest ally.
Shocking Comparisons With Eastern Europe
Perhaps most embarrassing is the comparison with countries Britain used to look down upon economically. Slovenia, a country that gained independence from Yugoslavia in 1991 and was part of communist Eastern Europe, now has average living standards almost on par with Britain.
Three million UK households are £3,000 per year worse off than the poorest households in Germany, and £1,500 per year poorer than the lowest earners in France. They’re also worse off than people in the poorest parts of Slovenia.
Parts of Birmingham, Britain’s second city, are now economically worse off than the most deprived areas of Lithuania, another former Soviet state. These are nations that were emerging from decades of communist mismanagement just 30 years ago, yet they’ve somehow overtaken parts of the UK.
The Numbers Are Brutal
Since 2019, average real earnings for British workers have risen by less than 3% when you account for inflation. That’s pathetic growth over six years.
Since the financial crisis began in 2007, real wages have increased by just 6.6%. To put that in perspective, from 2000 to 2007, real earnings rose by nearly 20%.
That means the average worker today is earning barely more than they did 18 years ago once you adjust for the cost of living. A generation of economic progress has been completely wiped out.
Adrian Pabst, deputy director at NIESR, described it as a “dramatic collapse in the living standards of the poorest 40% in society.”
Neither Prosperity Nor Security
The research found Britain is failing on both fronts that define a successful economy. We’re not delivering high wages that provide prosperity, nor are we offering the welfare safety net that provides security.
“A combination of weak productivity growth driving near zero growth in real wages and cuts to welfare has resulted in a situation where we are neither delivering prosperity through high wages nor security through welfare,” Mosley explained.
“That the poorest in our country now fare worse than those in nations once considered less affluent is a stark indictment of the UK’s economic and social model.”
It’s a damning verdict. Britain has managed to create the worst of both worlds: American-style cuts to public services without American-style wage growth.
What Went Wrong?
The productivity puzzle has baffled economists for years. In the 35 years before 2008, UK productivity doubled. In the 15 years since the financial crisis, it’s gone up by just 5%.
That’s an unprecedented stagnation that has left Britain falling further and further behind its competitors. Without productivity growth, wages can’t rise sustainably, and living standards stagnate.
Brexit hasn’t helped. Leaving the European Union was a self-inflicted economic wound that created friction in trade, reduced investment, and made Britain less attractive to international businesses.
The government shut down the Tier 1 Immigrant Investor Programme in 2022, eliminating a route for wealthy individuals to invest in Britain just as other countries were rolling out the red carpet for millionaires.
Low investment, both public and private, has crippled growth. The government hasn’t invested enough in infrastructure, while businesses have been reluctant to put money into an economy with such uncertain prospects.
The Rich Are Fleeing
Making matters worse, Britain is experiencing a record exodus of millionaires. Provisional data suggests approximately 16,500 millionaires left the UK in 2025, taking an estimated £66 billion in assets with them.
They’re heading to places like Dubai, Italy, Switzerland and the United States, where tax regimes are more favourable and economic prospects look brighter.
The UK stock market tells its own story. Over the past decade, the S&P 500 grew by 183% whilst the FTSE 100 managed just -1% growth. In 2024, some 88 firms delisted from the London Stock Exchange.
London, once the undisputed financial capital of Europe, has dropped out of the top five wealthiest cities globally. The capital is haemorrhaging both businesses and wealthy residents who see better opportunities elsewhere.
Political Failure
NIESR has called on the government to raise the income tax threshold to boost performance and suggested ending the two-child limit on benefits as the most cost-effective way to reduce poverty.
But frankly, it’s going to take more than tinkering around the edges to fix a problem this deep-rooted.
“The government’s mission to grow the economy is not just about aggregate numbers but about higher living standards in every part of the country,” said Adrian Pabst.
“It is vitally important to raise public investment in ways that unlock business investment to generate productivity increases and sustained real wage growth.”
A Question of National Identity
For centuries, being British meant something economically. Britain was the workshop of the world, the inventor of the Industrial Revolution, the centre of global finance and trade.
That identity is crumbling. Young people in Britain today can expect lower living standards than their parents’ generation, breaking a social contract that had held for centuries.
Parts of the country that were once prosperous industrial heartlands now languish in poverty whilst former communist nations surge ahead. The psychological impact of that reversal cannot be understated.
What Now?
The brutal truth is that Britain faces a choice: fundamentally reform its economic model or continue managing decline.
The current trajectory is unsustainable. You cannot maintain the NHS, state pensions, defence spending and public services on an economy that hasn’t grown meaningfully in 15 years.
Something has to give, and if history is any guide, it will be ordinary working people who pay the price through higher taxes, worse public services, and stagnant wages.
The question Max Mosley posed, whether Britain is still a rich country, has a depressing answer: not for much longer if things don’t change dramatically.
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Image Credit:
Keir Starmer arriving at 10 Downing Street — photo by Rory Arnold / No 10 Downing Street, licensed under UK Open Government Licence v3.0 (Crown copyright). (commons.wikimedia.org)
