Baroness Philippa Stroud is CEO of the Legatum Institute.

The UK is facing two major challenges. The ongoing pandemic, and national efforts to contain it, are impacting not just our health but also our jobs, our children’s education, and our relationships with each other and with the state. At the same time, we are approaching the end of the Brexit transition period and will soon be re-defining our place in the world and re-establishing our relationships with other countries outside of the European Union.

There are clear challenges for the UK to overcome, but also opportunities to grasp. The choices we make now will create the foundations and form the character of the nation we will be in the future; we need to decide carefully.

The good news is that the 2020 Legatum Prosperity Index shows the UK is in a strong position to emerge more prosperous from this time. Prior to the pandemic, the UK was the 13th most prosperous country in the world. On average, the British public enjoyed among the best living conditions globally, with access to quality healthcare and world-leading higher education institutions, and our economy was one of the most dynamic and enterprising in the world.

However, the last few years have seen the first signs of the deterioration of our prosperity, showing we must not take it for granted. This is not an irreversible trend, but it is a warning signal.

We must beware the trap of falling into a mindset of an overdeveloped society, vulnerable to entitlement and complacency. If we lose sight of our values and heritage, if we sacrifice innovation, purpose, and meaning out of a desire to avoid change and risk, we will create a window through which the hard-won prosperity of our forebears will evaporate.

The Prosperity Index reminds us of the multi-dimensional nature of true prosperity. Implicit in the Index is the danger of prioritising only one aspect above others, and at a time of crisis shows us what we need to protect.

Prosperous nations build healthy institutions, strong economies, and strong social wellbeing simultaneously. They do not trade freedom or the economy off against health or education.

The pandemic is testing the UK’s institutional, economic, and social resilience. One of the most deeply felt effects has been the change in how we interact with others – family, friends, neighbours, colleagues, and strangers. Over the last 10 years, the strength of personal and family relationships in the UK has deteriorated, and the strength of wider social networks has increased less than in other nations.

In addition, public confidence in national government is among the lowest levels seen across the world. This is not a reflection on any individual administration – levels of public confidence have fluctuated significantly over the last 15 years – but is perhaps a result of the testing times we have been through over the last few years, including the Brexit referendum and a number of general elections and leadership changes.

While our governance systems are still relatively strong, the UK has also experienced a decline in government effectiveness – of the 20 countries currently ranked highest for this, the UK has deteriorated most since 2017. This is deeply worrying, as good governance and decisive and effective leadership will be crucial to guide the UK through the pandemic and create a more prosperous society in the future.

As we go through this moment of change, we need to take a holistic approach to protecting prosperity. We need to protect the public from the harms of Covid, but also from the harms of restrictions. We need to suppress the virus without suppressing our freedoms or the potential for economic growth.

The UK’s current Covid response may be saving lives from the virus itself but it is putting them at risk in a variety of other ways. The cost of lockdown is high, in terms of deaths from cancer, heart disease and other illnesses, mental health challenges, loneliness, reduced economic growth, financial struggles, and educational decline, and it is being paid by the most vulnerable in society.

China was the first country to be impacted by Covid, and its response framed the context for the UK and much of the rest of the world. Its approach was one that moved to restrict the freedoms of its people and lock down its economic engine. Such actions are consistent with China’s ranking of 90th in the Index for governance and 159th for personal freedom but they are not the actions that build prosperity, they are ones that weaken it.

As a democratic nation built on the principles of good governance and personal freedom, the UK needs to be finding ways through this crisis that speak to the power and strength of who we are and the values of our democracy.

This is a time for mature citizenry, a moment for the UK Government to trust its people, and for people to respond by taking responsibility for their actions. Decisions should be made in a transparent way, sharing the evidence and explaining the rationale.

The public needs to be let into the decision-making process as much as possible, through reliable, accurate and timely information. We should be trusted to understand the conflicting demands placed on leaders and to reflect sensibly on the likely consequences of different approaches, not just presented with a few selected indicators.

This moment, as we battle with Covid and the transition period comes to an end, is an opportunity to re-establish a clear, bold vision for the country’s future and its character. For developed nations like the UK there are no well-worn paths for the journey ahead – we need to create them. But the Prosperity Index shows us what we need to protect and develop in order to build well for the future.

We must work together to continue building an inclusive society, with a strong social contract that protects the fundamental liberties and security of every individual. We must innovate together to continue developing an open economy, that harnesses ideas and talent to create sustainable pathways out of poverty. And we must all play our part to continue creating an enabling environment, so the contributions of each person can increase the quality of life and standard of living for everyone.

Although the world has changed, how prosperity is generated and perpetuated in a nation has not. The UK has overcome significant challenges in the past, and by working together and focusing on the core principles that build prosperity, we can be confident that we can do it again.