"Decline is a real threat , but it is a choice - a choice Labour’s plan to link Britain to the EU’s energy pricing scheme will only accelerate. We must do the opposite and reindustrialise. Changing direction will be hard, but necessary. We must re-engineer the UK into a high-growth, high-wage, low-migration, productive economy. We owe it to future generations to act now."
Britain’s economy is stuck. With GDP per capita sliding backwards as our economy fails to keep pace with the rising population, people in Britain are becoming poorer. This problem is not new: productivity and average wages have barely moved since the financial crisis, and Britain now lags the OECD. As incomes stagnate and inequality rises, Britain’s economy is becoming both weaker and more unfair. Fiscal tinkering at the edges will not do – the UK economy needs root-and-branch reform.
That’s why Onward is now launching its new research programme, Rebuilding our Economy, led by Head of Political Economy Gavin Rice. The first report in this series, The Turnaround, lays out the ten fundamental challenges to the UK, calling for radical change to achieve growth, security and a fair social contract. Onward will be evaluating these themes in greater detail over the coming months and offering bold solutions that can help Britain break free from stagnation.
Many of the causes of Britain’s sclerosis are well known. It suffers from crippling supply-side barriers to building houses, infrastructure, laboratories and industrial sites. Its energy is among the most expensive in the world. A web of planning rules, building regulations, bureaucratic quangos and judicial review processes stifle market-led growth. The difficulty in removing many of these obstacles is more political than intellectual – the diagnosis is clear.
But Britain’s economic sickness goes beyond these factors. The pace and scale of its deindustrialisation is greater than any other country in Europe or the G7, with manufacturing sinking to just 8% of GDP and the UK’s share of global goods exports now down to just 2%. Output from energy intensive industries fell by a third in just the last three years. From aerospace and automotives to pharmaceuticals, chemicals and precision engineering, Britain’s remaining high-value manufacturing base is in decline is output slows, businesses fail to grow and production is offshored. And in new technologies from quantum computing to AI, too many innovative companies with high value potential are simply bought up and move overseas to more attractive economies.
This is the opposite of the direction Britain needs. Instead, the UK should actively seek to reindustrialise, capturing more value in supply chains on-shore, and boost its share of global trade. The fate of high-value production in Britain has not been determined by the market alone, but by aggressive trade practices pursued deliberately by surplus economies, especially China. Britain must find a robust response to these distortions to secure its own interests, and reduce the dependence on foreign speculation that its trade deficit requires.
Rather than an economy of stagnant, low-value services and cheap labour, Britain must relentless drive productivity growth through innovation, technology, investment, skills and growing high-value industries. It must become a stronger, richer, fairer and more productive country.
Our ten research themes will be:
Your contribution will help fund cutting edge research to make the country a better place.
