The United Kingdom faces a series of challenges, some of which are global and some of its own making. At the same time, geopolitical risk has returned with the Russian invasion of Ukraine, and the secondary impact from spikes in food and energy prices have their own ramifications. We consider the future that may lay ahead for the UK. In particular, we cover the aftermath of Brexit and what that means, whether the United Kingdom stays united and the problems that stem from structurally weak productivity.

Executive Summary

1. Recent events have been a reality check for the UK, making fiscal responsibility a key issue for politicians in the years ahead
2. Brexit is a headwind: the UK’s terms of trade have deteriorated, but there is little political appetite to reignite the debate
3. A fragmentation of the United Kingdom seems almost certain, continuing the gradual diminishing of the UK’s global standing
4. The productivity conundrum is solvable but will need a clear plan and sufficient funding. Widespread deregulation is unlikely to be the solution.