A rebalancing programme for Britain: Ending austerity in the UK

Article

The rate of economic growth in the UK has fallen noticeably in recent decades. Economic growth since 2000 has averaged under 2 per cent per annum, and this poor growth rate looks set to continue for the foreseeable future. Worse, that meagre growth which does exist is unevenly distributed, with the result that living standards for many have stagnated and in-work poverty has increased.

At the heart of the UK’s low economic growth is low investment and low productivity. Investment as a percentage of the UK economy is significantly below that of any other G7 country. Investment in productive capacity has fallen from 3.6 per cent of gross domestic product (GDP) in 2008 to 2.7 per cent in 2017. Productivity growth over the 10 years to December 2017 is thought to have been the lowest since the 1820s on a rolling 10-year basis.

Our thesis is that a sustained improvement in productivity growth, and an increase in investment by both private and public sector, is the key to increasing the trend rate of growth.

There is no single solution. What is needed is the consistent adoption over a long period of a set of policies which, taken together, can correct the imbalances which create a low-growth environment, and in so doing revolutionise the UK economy.

Related items

  1. West Midlands Metro Tram at Victoria Square in Birmingham city centre during 2022 Commonwealth Games

    Transport and growth: Reforming transport investment for place-based growth

    The ability to deliver transformative public transport is not constrained by a lack of ideas, public support or local ambition. It is constrained by the way decisions are taken at the national level.
  2. A view of Glasgow, Scotland, from above.

    More than a safety net: The welfare state as springboard to economic success and a better country

    A perceived conflict between social spending and economic dynamism is deeply embedded in both Scottish and UK political discourse.
  3. The Home Office building in London

    Far from settled: The government’s ‘earned settlement’ consultation

    How long should people have to wait until they can permanently settle in the UK? This is the core question underpinning the Home Office’s ‘earned settlement’ policy, currently out for consultation.