What does an increase in ’economically inactive’ people do to the UK economy?

This BBC clip looks at the rise in economic inactivity in the UK and its implications for the macroeconomy as a whole. It looks at exactly who these people are - students, carers, the retired and the 2.7 million people who are outside the workforce because of health reasons, with people in their 20s more likely to be in this group than those people in their 40s.

This shrinks the population of working age - and can shift the LRAS leftwards, making it hard to grow, making inflation more likely and costing the government more - both in terms of benefits and the opportunity cost of lost output.