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The UK’s growing population: can the past teach us what will need to be invested into the economy in the future?

The UK’s growing population: can the past teach us what will need to be invested into the economy in the future?

 

UK ISA specialist, True Potential Investor, investigates the effects of the growing population in the infographic below.

The UK population hit 65.1m in 2015 and is projected to pass 70m by 2026; what effect will a growing population have on the amount that the government will need to invest in the UK economy? This study looks 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.  GDP broadly measures the overall economic activity of a nation and indicates its economic health and its standard of living.
 

Silent Generation

 

Sometimes ‘Traditionalists’, the Silent Generation were expected to be seen and not heard; 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.
 

  • Born:  1945 or prior
  • All were 16:  by 1961
  • UK population in 1961: 52,807,400
  • UK’s GDP in 1961: £529,152m
  • GB’s historic CPI inflation rate in 1961: 4.37%
  • UK disposable income per head in 1961: £5,979

 

Baby Boomers

 

The ‘baby boom’ followed the end of the Second World War; having witnessed both the Women’s Liberation movement and the Civil Rights movement, this generation is known to challenge the status quo. They like to seek immediate gratification and attempt to fulfill personal goals.
 

  • Born:  between 1946 and 1964
  • All were 16 by: 1980
  • UK population in 1980: 56,329,700
  • UK’s GDP in 1980: £859,674m
  • GB’s historic CPI inflation rate in 1980: 15.12%
  • UK disposable income per head in 1980: £9,188
  • UK’s employment rate (16 – 64) in 1980: 70.8%
  • UK’s unemployment rate (16 – 64) in 1980: 6.8%

 

Generation X

 

Sometimes dubbed the ‘MTV Generation’ 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 and as a result, this generation is independent, skeptical and self-sufficient, valuing a work/life balance.
 

  • Born:  between 1965 and 1976
  • All were 16 by: 1992
  • UK population in 1992: 57,584,500
  • UK’s GDP in 1992: £1,138,538m
  • GB’s historic CPI inflation rate in 1992: 2.54%
  • UK disposable income per head in 1992: £12,905
  • UK’s employment rate (16 – 64) in 1992: 69%
  • UK’s unemployment rate (16 – 64) in 1992: 9.9%

 

Millennials

 

Sometimes ‘Generation Y’, Millennials were increasingly surrounded by computers and technology; TV shows became popular during their childhood too, while they also witnessed the girl’s movement. This generation is confident, sociable and optimistic; they don’t always understand their limitations and value a sense of achievement and multi-tasking.
 

  • Born: between 1977 and 1995
  • All were 16 by: 2011
  • UK population in 2011: 63,285,100
  • UK’s GDP  in 2011: £1,729,121m
  • GB’s historic CPI inflation rate in 2011: 4.20%
  • UK disposable income per head in 2011: £17,991
  • UK’s employment rate (16 – 64) in 2011: 70.3%
  • UK’s unemployment rate (16 – 64) in 2011: 8.1%

 

Centennials

 

Also ‘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. Centennials are known to be more self-aware, self-reliant and driven, as well as socially minded but cautious.
 

  • Born: from 1996 to the current day
  • Began turning 16 during: 2012
  • UK population in 2015: 65,110,000
  • UK’s GDP in 2015: £1,888,737m
  • GB’s historic CPI inflation rate in 2015: –0.44%
  • UK disposable income per head in 2015: £18,770
  • UK’s employment rate (16 – 64) in 2015: 73.7%
  • UK’s unemployment rate (16 – 64) in 2015: 5.4%

 

Thoughts for generations to come

 

Based on the trends of previous generations, here are 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.

uk population growth

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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