The UK economy is at a critical juncture. The government needs to do more to promote long-term, balanced growth in the UK economy and to ensure that the benefits of increased prosperity are more equally shared. This will require it to develop a modern industrial strategy.

Traditional economic thinking is centred on the notion of economies returning to an equilibrium, and it lacks any great understanding of the dynamics of economic change. A modern industrial strategy - designed to support growth in the private sector so that the UK can reduce, or even eliminate, its trade deficit and return to full employment as swiftly as possible - will have to draw on new ways of thinking about the economy.

It will also have to be based on a vision of what the economy might look like in 2020. Such a vision is unlikely to be right in every detail, but it is necessary to recognise some of the major trends that will occur over the next decade - such as the ageing of the population and the continued development of emerging economies - and the trends that we might wish to see in the UK economy - better balanced growth - and to identify what needs to happen, by way of investment in infrastructure and skills for example, to bring about the desired outcome.

This survey of the state of the British economy focuses not only on how to promote growth but also the macro challenges ahead - including globalisation and massive technological change - structural issues within the UK economy, a range of supply-side issues such as productivity, innovation and skills, and the economic disparaties, regional and societal, that both reflect the state of the economy and present risks for its recovery.