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. A person sits at a desk in front of a laptop. A semi-transparent screen shows a digital AI agent

    Strike while AI is hot: Rebuilding worker power for the age of AI

    How worker power should be reanimated in the face of AI-driven labour market shocks.
  2. The exterior of the Ministry of Defence building

    The Europe agenda: Defence and security

    In this period of geopolitical chaos, greater defence and security integration offer a fruitful way for the UK to deepen its relationship with Europe.
  3. Rear view of unrecognizable people walking together on the street

    A tough hand: Why rising youth inactivity demands urgent action

    On Thursday, new data will likely show the number of young people who will be out of education, employment or training (NEET) will surpass 1 million for the first time since 2013.