'Decade of disruption' ahead in wake of Brexit vote, think-tank warns

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Britain is facing a "decade of disruption" in the wake of the vote to leave the EU, with a slowing economy, an ageing population and technological transformation set to bring major change, a new report has warned.

The centre-left IPPR think-tank said Brexit had delivered a "profound shock" to the UK's political and economic order which was likely to set the country on a path of permanently lower growth and living standards.

At the same time a rapidly ageing population - with the numbers of people aged 65 and over predicted to rise by a third by the end of the next decade - will impose new strains on the state with the funding gap for adult social care expected to hit £13 billion by 2030/31.

In the workplace, "exponential" improvements in new technologies - such as artificial intelligence systems and machine learning - will radically change the way people work, putting two-thirds of current jobs - 15 million - at risk of automation.

While the report said it would not end "work as we know it", who benefits from the changes - and who loses out - would depend on politics, which was likely to become increasingly assertive in the economic arena after decades of a liberalising consensus.

While there was the potential to create an era of widespread abundance, the changes could also usher in a "second machine age" resulting in radical concentrations of economic power.

The report predicts work is likely to become more insecure and more freelance while inequality is set to increase sharply with the income of high-income households forecast to rise 11 times faster than for those on low incomes.

The changes will take place against an international backdrop of growing uncertainty as the American hegemony which underpinned the post war international order fades and the Global South rises in economic and geopolitical importance.

Meanwhile, dwindling natural resources and the need to avoid climate change will force major change in the way energy is produced and consumed, potentially leading to "large-scale instability".

"Brexit is the firing gun on a decade of disruption," the report said.

"Even as what we do and how we work changes, the UK is likely to remain trapped in a low growth, low interest rate decade driven by demographic shifts, productivity trends, weak investment, weak labour power, high levels of debt, and the headwinds of a slowing global economy.

"Without reform, our political and social system will struggle to build a more democratic, healthy society in the decades ahead, even as Brexit accelerates us towards a radically different institutional landscape."

The report's author, Mathew Lawrence, said the challenge for Britain's progressives was to build a "high energy democracy" with meaningful engagement at national, city and local levels as well as in the marketplace through increasing the public's say over corporate governance, ownership and power.

"A politics of nostalgia, institutional conservatism and a rear guard defence of the institutions of 20th century social democracy will be inadequate," he said.

"For progressives, such a strategy will not be robust enough to mitigate against growing insecurity, ambitious enough to reform Britain's economic model, nor sufficiently innovative to deliver deeper social and political transformation. They would be left defending sand castles against the tide of history."

Lib Dem Treasury spokeswoman Baroness Susan Kramer said: "The report is a devastating indictment of the Conservative Government's hard Brexit strategy.

"In the face of huge global challenges, the Conservative response is to haul up the drawbridge and hope that the future will go away. It won't.

"Many of the huge international challenges identified in the report are more effectively faced working with our European friends, and within the single market."

Keir Starmer, shadow Brexit secretary, said: "This report shows once again the clear dangers of a hard Brexit and the importance of ensuring we get the best possible Brexit deal that protects jobs, the economy and living standards.

"It also reminds us that there are wider and profound challenges facing Britain in the years and decades to come - both to our economy, society and our place in the world.

"Labour has an obligation to future generations to find progressive and effective responses, and to help bring Britain back together after a deeply divisive referendum."

A Government spokesman said: "The British people voted to leave the EU and we are committed to delivering on that instruction and making it a success.

"We have been clear that we are seeking a bespoke arrangement for the UK - one that gives British businesses the maximum freedom to trade with and operate in the single market but also allows us to make our own decisions on immigration.

"While there may be challenges ahead, we approach them from a position of strength. Since 2010, we have cut the deficit by two thirds, created 2.7 million jobs and this year the UK is forecast to be the fastest-growing major advanced economy.

"We now have an opportunity to forge a new role for ourselves in the world and we will do so with optimism, making a success of Brexit and building an economy that works for all."