Economic growth: the ideas
Children born today will be taking their first steps into adulthood in 2040. What will life in the UK be like for them, according to current trajectories? What policy options do we have now that can influence or change that trajectory for the better?
Almost all of the UK Government’s options to improve outcomes by 2040 will be shaped by our economic fortunes. Economic growth is a lynchpin for improved standards of living and social progress, and bolsters the tax receipts that fund better public services. Policy that secures higher productivity and growth enables governments to pursue ambitious policies elsewhere to keep our citizens healthy and look after those who are not, provide good educational opportunities, to both resist and build resilience against a changing climate, and more.
But growth has been elusive for the UK in recent years, and particularly since the financial crisis of 2007-2008. The consequences of this continue to reverberate across the economy; the gap between where we are headed and where we could have been, based on pre-Global Financial Crisis trends, is stark.
We’ve convened the brightest and best economists and thinkers in the UK and beyond to discuss the issues, trade-offs and ideas for reversing the trend. We’ve already examined the fundamental facts and choices and here we highlight some of the many ideas raised by those at the forefront of growth economics.
Focusing on four areas that came up time and time again – our institutions, land use, labour markets, and business productivity – some of the ideas are big, and some are small. Some aim to add to the literature on well-trodden ground, and some are more novel. They don’t aim to provide a comprehensive strategy for ‘fixing’ growth, but we hope all are thought provoking.
The nine ideas that follow in this report are:
- Establish an enduring new independent growth institution
- Empower functional economic areas by establishing regional and local governments in England with a route to devolution and fiscal agency
- Tackle the housing crisis by moving to a zone-led planning system that simplifies the rules for developers
- Improve land use efficiency by introducing a land value tax
- Reduce labour market inactivity by harnessing data and AI to proactively support individuals
- Improve the transparency of the labour market to improve job quality
- Introduce regionally-specific migration routes
- Create ultra-low-cost energy zones to support industry
- Embrace experimentation by developing a productivity innovation fund to understand the most effective interventions