Please explain to me like I’m a 5 year old. How do we fix the economy?

[bushproblems]

The job market is shocking, the minimum wage rise has not pushed up the salaries in the next bracket, food is so expensive and working hard no longer feels like it provides the rewards it used to.

Im earning more than I have in my life, but I feel poorer than I did 10 years ago when I was just above minimum wage.

I get that employers have more costs so the profits of a company won’t trickle down like it did, but what, or who, can fix this?

Im feeling very despondent about the future for me and for the younger people in my family

Yes, and you’ll see wealth taxes have never worked. Or socialism. Yet so many people still believe this is the answer

@RafaistheKingofClay I’m saying it’s not working because the middle classes and working people cannot earn enough because the wealth makers are not making enough! Many companies are not making a profit. Their costs are too high.

Lack of growth and productivity stuffs all of us. The poor never ever have the spending power or choices of the middle classes and never have. They are actually a minority and never can spend as much and certainly pay far less tax but get more benefits, paid for by others. I don’t have an issue with the rich being rich but I want the people who are working to earn more and I explained why this isn’t happening.

Taking assets and money away from people because government is ineffective is not fair. It doesn’t work either as we are finding out. I think we cannot keep taxing the better off more and more. The tax thresholds are alarming to middle class workers now. and asking middle class people, to fund an ever increasing state sector is wrong. We get more tax from higher earners than all the lower tax workers put together. Why would anyone want to make it even more challenging for them? We need growth and productivity for the lower middle class and poorer workers to benefit from work. What we cannot do is substitute wages for state benefits.

If we do not support SMEs and larger employers, we ensure wages stagnate and indeed prop them up with welfare. It’s not getting us anywhere.

Incentivise work and new businesses rather than the opposite currently.

It needs productivity to be increased and incentives to work increased, which means:

• Remove the cliff edge that stops people working only 16 hours
• Remove the cliff edge that stops people earning above 60k and losing child benefit
• Remove the cliff edge that stops people earning over 100k and losing all sorts of things
• Remove incentives for not working

We need a country where the people who work are rewarded for it, not punished with loss of benefits etc.

I agree with this. Brexit, Covid, Ukraine war and Trump tarrifs have all battered trade and pushed up prices. There will be recover eventually, as there always is. I think we need investment in growth sectors and to build good trading relationships. Also fewer youngsters doing business degrees at mediocre unis that won’t lead to jobs and more doing trade apprenticeships.

Those are not bad ideas. Plus more apprenticeships that will lead young people into good jobs.

We need to increase productivity. Get people working who currently aren't and get part timers to work more. We need to do whatever it takes to get there whether it's grants and subsidies to employers, reducing benefits, import tariffs, more free childcare/wrap around care, adult education/training etc.

We've had decades of the "illusion" of economic growth by offshoring our manufacturing and relying on tourism and services, papering over the cracks of unemployment by encouraging Uni to students who'd be better with practical skills making/doing things, keeping costs down by buying cheap stuff from abroad, not just physical things but also power etc. We've been hiding the real balance of payment deficit by encouraging foreigners to buy property in the UK and paying for their kids to go to Uni in the UK.

It's a house of cards and is crumbling around us.

It'd be cheaper to subsidise employers in the UK to employ people and make things rather than pay out on benefits (and often the resultant crime and social problems arising from unemployment), and when UK residents buy stuff from abroad, that's currency leaving the country worsening the balance of payments deficit.

Nail on the head.

We need to increase productivity. Get people working who currently aren't and get part timers to work more.

Produce what? This isn't the 1970s when we had industry to produce items, we are a financial services, retail, healthcare and education country with some other industry but only at around 10% of GDP not like we used to have 40-50 years ago, thats gone and was only around 30% in the early 1970s

We need to increase productivity. Get people working who currently aren't and get part timers to work more

Poor productivity is more to do with lack of training and investment. Britain has always been shit at this. I mean the state of the trains from years long neglect is really hampering everything.

Why doesn’t the north receive same amount of infrastructure investment like the SE? Imagine how things would be if all the north was interconnected like the SE?

I believe after 60k for child benefit it's a taper, not a cliff edge, but I see your point.

@ArseInTheCoOpWindow Because it pays way less in tax? Because fewer people are moving around? However the north wanted HS2!!!! How stupid was that? Clearly money should have been spent in the north first but everyone wanted to get to London a bit quicker. Bigger fools you.

Controversially putting up wages doesn't help us compete. We need to reduce the cost of living and you can't do this by putting up wages.

The issue in many areas is our competitiveness in a global market.

We need to depress housing prices (again controversial) and living costs, not put up wages.

It sucks but it's true.

I know of a British Manufacturer who has gone into administration this week in part because of these issues.

Firstly HS2 as originally designed was not just about getting to London. It would have given new ways for eg Leeds to Birmingham travel

Secondly HS2 is not primarily about speed at all, it's about more rail capacity. The line from London to Birmingham is jam packed and that often leads to delays

People want to move around though in the north. Loads of people commute between the cities. They are equidistant apart.

But we have Stephensons Rocket up here. People pay lower taxes because there is nothing to facilitate an economy to pay higher taxes. That’s what needs changing.

Go back to 1979, stop thatcher and the tories laying the foundations for every issue this country currently faces:
Selling off council housing - housing crisis
Selling off our steel and energy industries
Privatisation of water, rail etc - disastrous results for customers/public health/cost of living
Closing mh units, special schools and the introduction of so called Care in the community - seriously mentally unwell people in our communities and nowhere for kids and adults with significant mh issues and disabilities
Cutting the armed forces
Cutting the police force - (g4 were touted by michael Howard who was a share holder)
De funding the nhs - recruitment and retainment crisis
De funding education - recruitment and retention crisis
Brexit (the erg) - has costs billions in lost revenue and raised prices, not to mention weakened us as a global power
Covid - absolute grift and fraud by the tory party and mps, which will never be paid back

Not an easy fix, and people simply don't want to pay more tax for better
Public services and successive governments will not tax the billionaires.

🤷‍♀️

HS2 is also about freight, and removing HGVs from the road with 144 extra frieght trains per day. Our motorways will become further gridlocked without these services

If it wasn't about speed, then why waste tens of billions on the infrastructure to make it a fast line? We could have saved tens of billions and it would have been open by now if it had been engineered to the same speed as the West and East coast main lines. It's the fact that it was built for speed that has caused a lot of the infrastructure costs as it's been forced to be built as straight as possible meaning more massive bridges, tunnels, embankments etc., than if it had been a "normal" high speed line that could have had curves and inclines.

I don't recall Blair and Brown doing much about reversing any of that in their 13 years of power??

We are now at the point where if you have children, you will likely get more in benefits than working - especially in parts of the country (such as where I live) where most jobs are minimum wage - even things like senior management charity jobs.

Ironically working in a lot of roles locally is be becoming a privilege ONLY for people who don't NEED to work (because the only people who can afford to work for local charities etc. are married to someone earning 'proper' money).

Lots of other people are just choosing to rely on benefits as the easier option in terms of income security and simple admin.

I spoke to a health visitor recently who said 1/3 of her new parents are now claiming PIP with fibromyalgia as the leading cause. (And I'm saying this as someone who has a lot of long-term conditions myself!) But who can blame them?

@Badbadbunny
Walk in centres nhs
Surestart centres for babies and families
Child poverty reduced massively, more funding for education and the nhs - the wait for treatment was <18 weeks....

This is it. Tax changes behaviour - something the government seems to not understand. The current tax system incentivises workers to cut back and work less so the government actually receives less tax in £. Many people approaching 100k cut back their hours, because why would you pay tax of 62% (and even more in some circumstances) when you could take some extra time to yourself and only pay 45%? Whereas if their tax rate remained 45% they would most likely carry on full time and the government would receive more tax. Other high earners decide to leave the country, taking their tax with them altogether. Past a certain point, increasing the tax rate reduces the actual tax £ received.

Any why make it so hard for small and medium sized businesses by increasing NI, wage costs and business rates such that many have stopped hiring, stopped investing and may even close altogether? We need a tax system that supports small businesses to grow so they can hire more employees (who would also pay tax), or increase production. And more jobs = fewer people on benefits. Many business have reported cancelling expansion plans because the tax increases mean they can no longer afford it. It does us no good at all to hammer businesses. They are the backbone of the economy and we need them to be able to grow.

And look at stamp duty. This has a direct effect on property transactions. When downsizing is so expensive, people don't bother. This keeps them hanging on to unsuitable family homes because it's cheaper to buy in help than it is to move to that smaller, manageable bungalow. Family homes then become more scarce, pushing prices up even further.

We need lower taxes to remove disincentives to work and to stimulate the economy to grow. And in the short term we can all see inefficiencies in bureaucracy that would save a fortune - several examples of which have already been given on this thread.

And for info, I'm a full time carer married to a BR taxpayer so none of these changes affect me personally. I'm just painfully aware that we are killing off that golden goose and all these tax hikes are going to make things worse in the long run.

The only tried and tested way of increasing productivity is to cut consumption and direct that money towards productive capital investment (education, transport, housing, infrastructure). This is how all Scandinavian countries operate (high tax but also high investment).

This means spending less money on the old and unproductive (pensions, healthcare, welfare) and directing that towards investment.

That is literally the only way the UK can boost productivity growth in 5-10Y given its deteriorating demographics.

The problem is that voters (pensioners specially) do not want to give up their many unearned benefits so the UKs economic situation keeps deteriorating in the face of Brexit and Tariff damage.

The UKs public finances are very much in the danger zone now due to debt service costs (£120bn/year) and the need to increase defense spending.

What we are seeing now in the UK is large scale real wage devaluation as productivity growth is negative and wages cannot sustainably keep up with inflation.

Cost of living crisis will be getting worse in 2026 as more extra tax/costs are passed on to consumers in the form of higher prices.

All said, while things are harder now than they were 20 years ago (primarily due to housing) it’s still far better than it was in the 1970s and 1980s.

People today can’t imagine what it was like for a young couple starting out having to rent an absolute hole of a flat - compared to what they can get now.

Even in 1990 a 2 bed terrace house rent was £550 a month and is now only £750 (same house in same town). Wages were a third of what they are now at the time.

It won’t get better for most really; we typically follow the US so basically the divide between those with and without will keep getting worse.

NHS will keep going down hill due to it’s enormous cost and more and more people will need to go private for medical treatments.

So tax more?