The previous chapters argued that the UK faces major challenges and changes in the 2020s. We now turn to how we should think about responding. The significance of the questions being asked means that the answers must amount to more than simple changes in policy here or there. Rather, the UK must renew its economic strategy and do so while focusing on the goals of sustainably higher growth, lower inequality, and successfully navigating change. We focus on the UK’s economic strategy as a whole, although the analysis has significant implications for devolved nations and regions, who play important roles in supporting growth, reducing inequality and innovating on policy more generally.
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- The magnitude of Britain’s economic challenges means that the task of the 2020s is to renew our economic strategy to tackle low growth and high inequality.
As well as being clear about the problems it must address, an effective strategy would start from the reality of our existing economy, identify real as well as surmountable constraints, be clear about trade offs, and be backed up by policies capable of moving the dial over the long term.
- Elements of a way forward have been proposed, from the UK Government’s focus on science, to the Labour Party’s green investment plans, or the Welsh Government’s prioritisation of social partnership. And we can learn from international examples of countries who have renewed their economic strategies: for example Germany after unification.
- But we are not on course to renew our economic strategy. Partly because it is hard and partly because it is far from clear that policy makers are serious about doing so.
Some argue we don’t need growth because it won’t translate into gains for ordinary households, ignoring the reality that a lack of growth is the cause of flatlining wages. More common is to recognise that growth is necessary, or that inequality is too high, but to be deeply unserious about what it might take to change things. A manufacturing jobs revival is promised, with no engagement with the reality of declines in such jobs across the advanced world. Half of the debate about Brexit denies its costs, while the other half denies its reality.
- There is a burning platform for a renewed economic strategy. People across the political spectrum are concerned about prolonged low growth and high inequality, but the task ahead is to be serious about the answers to it.