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Poor health in the North costing the UK billions in lost productivity

Closing the health gap between the North and the rest of England could put an extra £18.4 billion into the economy per year, according to new research.

A new report by Health Equity North (HEN) and supported by researchers from the NIHR Applied Research Collaboration (ARC) North East and North Cumbria (NENC) has shown that the relationship between health and productivity has become stronger over the last seven years, placing a huge financial burden on the economy and stagnating possible productivity growth.

The scale of the health-related economic inactivity crisis is greater in the North of England, with workers more likely to lose their job due to ill health, and those without educational qualifications facing a ninefold higher risk of losing their job if they become ill.

‘Health for Wealth 2025: Building a Healthier North to boost UK Productivity’ revisits the issues exposed in the landmark 2018 Health for Wealth report and explores how the landscape has changed over the last seven years.

It shows that regional inequalities in health, wages and economic inactivity have deepened since the 2018 report – a trend that began even before the COVID pandemic. This sharp rise in economic inactivity due to ill health, now at a record high, underscores the urgent need to put health at the heart of any strategy for sustainable economic growth.  However, there are some ‘good news stories’ in the North, with productivity growth strong in areas such as Greater Manchester, Cumbria and parts of Yorkshire over the past few years.

In 2018, the Northern Health Science Alliance’s Health for Wealth report highlighted the link between the North’s poor health and poor productivity for the first time, and revealed that tackling health inequalities between the North and the South could generate an additional £13.2bn per year. Today’s analysis show that this figure has risen to £18.4bn per year.

Findings also show that improving physical and mental health through a variety of policy changes, proactive health programmes and empowering local authorities, could deliver transformative economic benefits – particularly in regions such as the North East, where improving population mental health alone could add £6.6bn to the economy.

Key findings

• If the health of the North was matched to the rest of the country, it could generate an additional £18.4bn a year – a 13% increase in economic gains found in the previous Health for Wealth report published in 2018 when accounting for inflation.
• People living in the North are two times more likely to lose their job following a spell of ill-health than those in the rest of England.
• In the North, workers with no educational qualifications are nine times less likely to remain employed following a spell of ill health compared with those with at least an A-level qualification, whereas in the rest of England, there is no statistically significant relationship between worsening health and remaining employed by educational attainment.
• £6.6bn could be added to the economy if mental health was improved in the North East.
• Workers in the North who experience ill-health suffer monthly pay losses that are nearly triple the national average – equal to 6.6% vs. 2.3% national average.
• Since 2018, all three northern regions have experienced, on average, more than double rises in economic inactivity due to ill health compared with London – rising by 22% vs. 10% respectively.
• Amongst people with long-term health conditions, the gap in economic inactivity between the North and rest of England has nearly quadrupled since the start of the COVID pandemic – increasing from a 1.1 percentage point difference to 4.2 percentage points (47% to 51.2%).
• The regional economic divide between the North and the South has increased since 2018, with gaps in total economic inactivity growing by 8% and in wages by 5%.
• The relative gap in productivity (as measured by GVA per head) has decreased by 2%, owing to the relatively greater increases in the North, particularly since the pandemic. However, the gap remains large, with 26% lower productivity in the North than in the rest of England in 2023. In particular, Greater Manchester and some parts of Yorkshire experienced the highest increases in productivity growth over the past two decades, with accelerated improvements since the pandemic. However, other parts of the North – including the majority of the North East – are continuing to be left-behind.
• The new report suggests that unless decisive action is taken, the North-South health and productivity divide will continue to widen, limiting the UK’s ability to deliver inclusive, sustainable growth.

Additional findings:

Wages and GVA

• Overall, between 2013 and 2022, the average gap in GVA per head was approximately 30% lower in the North (£22,710 vs £29,379) – 36% of the gap can be attributed to the poor health in the North.
• Since 2013, the gap in economic inactivity increased by 8% (from 3.8 to 4.1 percentage points) and the gap in wages rose by 5% (from £54 to £57). The relative gap in productivity has decreased by 2%, with the Northern regions experiencing faster productivity growth by 1% since the pandemic.

Economic inactivity

• Since 2019, economic inactivity rates have been rising ten times faster than the growth of the working-age population. Economic inactivity due to ill-health is now at its highest levels, with poor mental health and musculoskeletal problems being the main cited reasons.
• Economically inactive people in the North are more likely to have mental health problems, to be younger and to live in larger families and more likely to be private renters.
• The economic inactivity rates due to ill-health in North East are more than double compared with the rates in South East (9.5% vs. 4.5%), with the remaining southern regions having similarly low rates around 5%. The North East has the highest rates of economically inactive women at 9.7% and 9.4% for men – compared to 5% and 3.9% respectively in the South East.

Mortality and morbidity

• Between 2013 and 2022, rates of mortality were 16% higher in the North than in the rest of England, with the rates of morbidity being 45% higher.
• Since 2013, the gap in morbidity between the North and the rest of England has increased by 62%, with the gap in mortality rising by 15%.

Health and productivity

• In the North East, potential economic gains from improving population mental health amount to £6.6bn in terms of productivity and household prosperity.
• To reduce the employment gap between the northern regions and the rest of England by 10%, population self-rated health problems in the North need to be reduced by 4.4%.

The report urges government and business leaders to make health a central component of the UK’s productivity and growth strategy.

The recommendations call for targeted investment in mental health services, preventative programmes, and public health funding across the North of England, alongside reforms to benefits and employment support that promote health and economic participation. Authors also advocate for regionally driven strategies with embedded health targets to tackle inequalities and ensure place-based solutions align with national goals.

Professor Clare Bambra, Academic Co-director of Health Equity North, Professor of Public Health at Newcastle University and ARC NENC theme lead for Inequalities and Marginalised Communities, said: 

“Whilst many welfare and employment reforms are designed to reduce long-term benefit dependency and encourage people back into the workforce, these efforts will not work unless they are supported by sustained investment in public health, health care and mental health services. Without addressing the root causes of ill health in the North, we risk pushing people into situations of poverty – worsening their wellbeing and limiting their capacity to work – all while our economy continues to take the hit.

“To genuinely improve economic participation, we need to ensure that people are not only healthy enough to be able to work, but also healthy enough to thrive in employment. The link between good health and a strong economy is undeniable – and policy must reflect that reality.”

Hannah Davies, Executive Director at Health Equity North, said: “There is a great deal of work being done across local government, central government, and the third sector to tackle the North’s health and productivity challenges – but the scale of the problem means there is still so much more to do.

“Our new analysis makes it clear that health investment is not just a social or moral priority, but an economic necessity. Poor physical and mental health are holding back the potential of millions of people and, in turn, the productivity of the entire UK. If we want a stronger economy, we must start by building a healthier nation. Prioritising mental health, prevention, and place-based support in the North will deliver lasting returns in prosperity and wellbeing.”

The report, Health for Wealth 2025: Building a Healthier North to boost UK Productivity, is available to read here.

Health Equity North is a virtual institute focused on place-based solutions to public health problems and health inequalities across the North of England. It brings together academic expertise from the Northern Health Science Alliance’s members of leading universities and hospitals.