Britain’s age of material austerity

Material consumption and production has declined as the economy has ground to a halt

We understand the British economy primarily through monthly statistics on GDP percentage growth and inflation rates. This is proving increasingly unhelpful in ascertaining real progress. Post-2008, GDP growth has been held up by artificially low interest rates and, in the case of the United States, a very generous fiscal regime backed by the dollar. This is quite different to the growth we had in the twentieth century when 3% growth could run in line with shrinking deficits.

Critiques of GDP are longstanding. In China, currency and commodity investors have often disregarded GDP figures in favour of former Premier Li Keqiang’s eponymous index (40% outstanding bank loans, 40% electricity consumption, 20% rail freight). While GDP should likely remain the default indicator for economic progress, it could help if British leaders take a leaf out of the Chinese playbook and start emphasising material consumption.

How big is the economy in material terms, as in actual tonnage? For a project, I have been collecting data on major British production facilities and mapping around 100 million tonnes of annual capacity. The ONS has thankfully gathered a comprehensive material flow analysis for all British economic activity.

What I have found chimes with U.S. conservative Julius Krein’s view that governments today offer multiple forms of austerity besides the budget-centred austerity we have partially seen in Europe.

Net Zero is itself a form of austerity, deferring consumption of certain energy assets and interfering in consumer choices to reduce overall emissions. However, Net Zero is just the spearhead of a broader trend in Britain towards material austerity; that is, the decades-long detaching of population and headline GDP increases with declines in material and energy intensity.

The economy is just four things.

British material consumption, in terms of raw tonnage, is reducible to four significant inputs: biomass, metal ores, non-metallic minerals and fossil fuels. In 2022, total British material consumption (extraction and imports minus exports) was 568 million tonnes, down from 743 million tonnes in 2000.

In 2022, 221 million tonnes (39%) of consumption was non-metallics, including gravel, chalk, dolomite, limestone, gypsum, clay, sand, salt, slate, and inorganic chemicals. These inputs are essential to producing intermediates like cement, which is, in turn, necessary for making mortar and concrete, which is needed for every aspect of construction.

Aggregates, along with the fossil fuel product bitumen, are also required for the production of asphalt, which is necessary for all road construction. These non-metallic staples are essential for the manufacturing industry. For example, glass is manufactured from sand, soda ash, and lime, and ceramics are made from alumina, silica, lime, and magnesia.

Lime, heated from limestone, is essential to removing impurities in steelmaking and neutralising acidic elements in agricultural soil. Silica sand, also known as industrial sand, is a crucial input into glassmaking. Nearly 1 million tonnes of China clay is extracted from the South West and is used in white ceramics and paper. Another 1 million tonnes of ball clay is extracted from quarries in Devon and Dorset. Ball clay is used as a plasticising agent in pottery products.

A further 32% (182 million tonnes) of consumption was biomass, meaning all crops, wood, livestock, fruits and vegetables. Fossil fuels accounted for 27% (150 million tonnes) of consumption. Once a significant fossil fuel exporter, Britain is now a net importer of over 80 million tonnes of fossil fuels and fossil fuel products annually.

Lastly, metallic ores accounted for just 2% (10 million tonnes) of net-material consumption. This is mainly due to metal ores being heavily traded as refined products. In 2023, we exported 20 million tonnes of metal ores, including 11 million tonnes of iron (mostly scrap steel) and 6 million tonnes of fabricated metal products. Meanwhile, we imported 30 million tonnes of metal ore-based products every year, half of which were fabricated metal products.

Such large material flows require significant infrastructure. Over 500 rock, sand, and gravel quarries are strewn across Britain. Twenty cement quarries support over 1,000 concrete and mortar plants and over 250 asphalt plants, where proximity to final use is critical. There are seven major lime quarries and 16 silica sand quarries.

There are 36 railheads and 161 depots and wharfs to help transport all of this material. The country has 51 major ports that manage over 400 million tonnes of material annually. The largest port, when measured in annual tonnage, is the Port of London. The largest port in terms of lift-on / lift-off capacity is Felixstowe, which has 4 million twenty-foot equivalent units of container capacity.

The 21st-century diet

Britain’s primary physical inputs have declined substantially during the 21st century, and our imports have increased. From 2000 to 2023, Britain’s import dependency ratio (imports minus exports as a share of consumption) for basic materials grew from 3% to 28%, even as material consumption fell 24% from 743 million tonnes to 568 million.

Much of the increase in imports came from fossil fuels, but the amount of non-metallic imports increased from 10 million tonnes to 20 million between 2018 and 2023. In other words, the decline in material consumption has not even led to the benefit of fewer imports. In 2000, Britain’s trade balance in concrete products reversed from a net surplus of £50 million to a net loss of £400 million. Much as with electricity, we are somehow managing to combine lower consumption with greater import dependency.

From 2000 to 2023, fossil fuel consumption declined by 38%, non-metallic minerals by 24%, metal ores by 40%, and biomass stayed roughly the same at 1%. If we say that fossil fuel reductions are mainly due to changes in electricity supply, non-fossil fuel material consumption in Britain has declined 16% during the 21st century, while the population has increased by 15%.

Figure 1: British material consumption. Source: ONS.

The result is that, on a per capita basis, Britain’s material consumption resembles Latin America more than Europe, North America or East Asia. Britain consumes 11 million tonnes of cement, which translates into 106 million tonnes of concrete products, including ready-mix, precast, mortar and asphalt. For context, the world consumes around 4 billion tonnes of cement and 30 billion tonnes of concrete.

British aggregates production is way below the developed world average, at 3.9 tonnes per capita versus 5.3 tonnes per capita. Britain consumes 233 kilograms of cement per year, well below the EU average of 347 kg per year. The picture is similar for metals. Britons consume 135 kilograms of apparent steel per capita as of 2023. The world average is 219 kg, the EU average is 284 kg, the U.S. is 226 kg, and China is 628 kg. Atleast when looking at steel consumption, Britain is closer to Latin America and the Middle East than North America, Europe or East Asia.

This trend continues down the material supply chain. British residential floor space per capita teeters around the European average, far below that of the Netherlands, Germany, or the Scandinavian countries. We are the most unautomated major country in the developed world. The British economy’s ability to actually process new material, from gravel to advanced machinery, is internationally substandard.

Reducing material consumption while maintaining anaemic GDP growth is often hailed as a form of efficiency. But it doesn’t seem to translate into significant productivity gains. Instead, Britain’s physical stock has been diluted to extreme degrees. We use less steel, cement, concrete, and fuel than almost all our peers, and we also have far less investment and housing space.

It is not surprising, then, that pessimism has consistently dogged the country since 2008. Minor upswings in growth between 2011 and 2015 were temporary and mainly just served as an excuse not to tackle systemic challenges. We are told the GDP has increased even as electricity and material consumption have gone down. We are carrying out the economist’s dream of untying growth and wealth from material inputs and intermediate production.

In reality, our GDP per capita, when accounting for inflation, has been stagnant since 2008. If we apply simple inflation adjustment to disposable income measures like the Asda income tracker, we see a flatlining of cash spent on the weekly shop.

If we apply inflation adjustment to manufacturing turnover, we actually find a slight reduction in revenue. In terms of gross value-added manufacturing terms, Britain is where it was in 2006. In 1999, after Thatcherism, we were the fourth largest manufacturer. Today, we are 11th and falling fast. In other words, our ability to combine economic development with material austerity is showing its limitations.