Rising levels of mental ill health could cost the UK economy £170 billion a year by the end of the decade, as more people are pushed out of work and productivity declines.
The warning comes as new analysis shows the economic impact of mental health is being driven largely by people leaving the workforce, rather than short-term absence.
The report, from insurer Zurich UK, found that by 2030 almost one in three working-age adults in the UK could be living with a mental health condition.
This would give the UK one of the highest rates among comparable high-income economies.
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Workforce participation driving economic impact
The analysis found that 98 percent of productivity losses linked to mental health are due to reduced workforce participation rather than sickness absence.
People with a mental health condition are significantly less likely to be in work, with employment rates 29 percentage points lower than for those without one. This gap is wider than in comparable countries such as Germany and Australia, where the difference is considerably smaller.
It suggests that long-term economic inactivity linked to mental health is a key driver of labour shortages. The report also points to rising levels of mental health conditions among younger people, raising concerns about future workforce participation.
By 2030, rates among teenagers are expected to reach 64 percent, double that of the wider working-age population. Anxiety disorders account for the largest share of conditions, followed by depression and other mental health issues.
The figures come alongside a rise in the number of young people not in education, employment or training, which has reached its highest level in five years.
Peter Hamilton, head of market engagement at Zurich UK, said early intervention would be critical to addressing the problem. “The rise in youth mental health care needs is the start of a wave that will shape the UK’s workforce for a generation,” he said.
“We know that those who are off work for less than twelve months are nearly five times more likely to return than those off for longer.”
Cost far exceeds current spending
The report estimates that the wider economic cost of mental health conditions is significantly higher than current public spending on support services. The UK currently spends around 1.4 percent of GDP on mental health systems, but the wider cost of lost wellbeing and productivity is far greater.
By 2030, productivity losses alone are expected to exceed 5 percent of GDP, outpacing the projected impact in other major economies. Across the countries analysed, the burden of mental ill health falls heavily on employers and individuals, rather than being absorbed by formal support systems.
Improving diagnosis alone will not be enough to address the economic impact of mental health conditions, experts say.
Sojan Joseph, MP for Ashford, Hawkinge and the Villages and chair of the All-Party Parliamentary Group on Mental Health, said the link between mental health and employment must be addressed. “The rising rates of mental health and high numbers of young people not in education, employment or training is very concerning and the two are closely linked.”
He said employment plays a role in wellbeing. “Young people who are NEET are more likely to suffer from mental health conditions, such as depression or anxiety, whilst also missing out on the social, structural, and therapeutic benefits that education or work can offer.”
The report calls for a stronger focus on helping people enter, remain in and return to work, alongside earlier intervention and better support pathways.
With mental health conditions expected to rise further, the findings suggest that employers will play an increasingly important role in supporting workforce participation and reducing long-term economic inactivity.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
