By 2026, the UK’s population will reach 70 million: how will the economy be affected?

UK ISA specialist, True Potential Investor, investigates the effects of the growing population

The UKs population is growing, reaching an estimated 65.1 million people in 2015 and projected to pass 70 million people by 2026. What effect will a growing population have on the amount that will need to be invested by the government into the UK’s economy, though? Here, we take a look at key stats of previous generations to try and forecast the same parameters but for generations to come…

Understanding Gross Domestic Product

Gross Domestic Product (GDP) is used throughout this infographic. It represents the monetary value of all the finished goods and services that is produced within a country’s borders within a specific time period.

All private and public consumption is included within GDP, as does investments, government outlays, private inventories, paid-in construction costs and foreign balance of trade — whereby exports are added and imports are subtracted. In essence, GDP broadly measures the overall economic activity of a nation and indicates its economic health and gains an idea of its standard of living.

Silent Generation

Also known as Traditionalists, the Silent Generation were named as such as they were expected to be seen and not heard. Due to growing up through the Great Depression and the Second World War, this is a generation who considered work a privilege and held the belief that you earn your own way through hard work.

Date period: Born during 1945 or prior

All of this generation were 16 by: 1961

UK population (estimated) in 1961: 52,807,400

UK’s GDP (chained volume measure and seasonally adjusted) in 1961: £529,152m

Great Britain’s Historic CPI inflation rate in 1961: 4.37%

UK real households’ disposable income per head in 1961: £5,979

*Employment and unemployment rates unavailable for 1961

Baby Boomers

Baby boomers were named as such as there was a ‘baby boom’ in the years that followed the end of the Second World War. Due to witnessing both the Women’s Liberation movement and the Civil Rights movement, this generation is known to challenge the status quo. They also like to seek immediate gratification and attempt to fulfil personal goals.

Date period: Born between 1946 and 1964

All of this generation were 16 by: 1980

UK population (estimated) in 1980: 56,329,700

UK’s GDP (chained volume measure and seasonally adjusted) in 1980: £859,674m

Great Britain’s historic CPI inflation rate in 1980: 15.12%

UK real households’ disposable income per head in 1980: £9,188

UK’s employment rate (aged 16 to 64 and seasonally adjusted) in 1980: 70.8%

UK’s unemployment rate (aged 16 to 64 and seasonally adjusted) in 1980: 6.8%

Generation X

Sometimes referred to as the MTV Generation as they witnessed the growing popularity of music videos and, more specifically, the emergence of the MTV channel, Generation X also lived through the fall of the Berlin Wall. As a result, this generation is independent, skeptical and self-sufficient, not to mention valuing a work/life balance.

Date period: Born between 1965 and 1976

All of this generation were 16 by: 1992

UK population (estimated) in 1992: 57,584,500

UK’s GDP (chained volume measure and seasonally adjusted) in 1992: £1,138,538m

Great Britain’s Historic CPI inflation rate in 1992: 2.54%

UK real households’ disposable income per head in 1992: £12,905

UK’s employment rate (aged 16 to 64 and seasonally adjusted) in 1992: 69%

UK’s unemployment rate (aged 16 to 64 and seasonally adjusted) in 1992: 9.9%

Millennials

Also known as Generation Y, Millennials experienced an upbringing where they were increasingly surrounded by computers and technology. TV shows became popular during their childhood too, while they also witnessed the girl’s movement. As a result, this generation is confident, sociable and optimistic. They also don’t always understand their limitations and value a sense of achievement and multi-tasking.

Date period: Born between 1977 and 1995

All of this generation were 16 by: 2011

UK population (estimated) in 2011: 63,285,100

UK’s GDP (chained volume measure and seasonally adjusted) in 2011: £1,729,121m

Great Britain’s Historic CPI inflation rate in 2011: 4.20%

UK real households’ disposable income per head in 2011: £17,991

UK’s employment rate (aged 16 to 64 and seasonally adjusted) in 2011: 70.3%

UK’s unemployment rate (aged 16 to 64 and seasonally adjusted) in 2011: 8.1%

Centennials

Often also referred to as Generation Z, iGen and Post-Millennials, this group lived through 9/11 and its aftermath, witnessed a worldwide economic recession and read countless news reports about war. As such, Centennials are known to be more self-aware, self-reliant and driven, as well as socially minded but cautious.

Date period: Born from 1996 to the current day

This generation began turning 16 during: 2012

UK population (estimated) in 2015: 65,110,000

UK’s GDP (chained volume measure and seasonally adjusted) in 2015: £1,888,737m

Great Britain’s Historic CPI inflation rate in 2015: -0.44%

UK real households’ disposable income per head in 2015: £18,770

UK’s employment rate (aged 16 to 64 and seasonally adjusted) in 2015: 73.7%

UK’s unemployment rate (aged 16 to 64 and seasonally adjusted) in 2015: 5.4%

Thoughts for generations to come

From analysing the trends of previous generations, here’s a few points to consider for what might be to come for the generations to come…

  • As well as the UK’s population continuing to grow, so too has the nation’s GDP and real households’ disposable income per head.
  • Following a dip as the Baby Boomer generation was reaching adulthood, the UK’s employment rate has continued to increase.
  • The UK’s unemployment rate did increase as the Baby Boomer generation reached adulthood too. However, in the generations that followed, the unemployment rate has continued to drop.
  • It would be very difficult to forecast the nation’s rate of inflation in the years to come. As showcased when analysing the previous generations, Great Britain’s Historic CPI inflation rate has altered in a manner that doesn’t appear to follow a trend and certainly cannot be compared with the trends of any other parameter covered.

Sources:

https://www.investopedia.com/terms/g/gdp.asp

https://genhq.com/faq-info-about-generations/

https://www.thebalancecareers.com/workplace-characteristics-silent-generation-2164692

https://managementisajourney.com/understanding-and-managing-the-4-generations-in-the-workplace/

https://www.businessoffashion.com/articles/intelligence/tapping-generation-z

https://www.thesun.co.uk/fabulous/5505402/millennials-baby-boomers-generation-groups-z-y-x-explained/

https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/mar2017

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmi/pgdp

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/timeseries/lf24

https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms

https://www.inflation.eu/inflation-rates/great-britain/historic-inflation/cpi-inflation-great-britain.aspx

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihxy/ukea

 

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