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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- Renewing the UK’s economic strategy will be far from easy, economically or politically. But those questioning whether the gains will be worth it, given slowing growth at the global frontier, ignore the fact that the UK is a long way from that frontier.
- Australia, Canada, France, Germany and the Netherlands are not the richest, or most equal, countries in the world and would long have been considered the UK’s peers. But we’re now 21 per cent poorer than them on average, dwarfing the Office for Budget Responsibility’s forecast of a 4 per cent hit to our long-run productivity from Brexit.
- These countries are also more equal than the UK, such that if we reduced inequality to the levels in the comparison group it would raise incomes for the poorest fifth of the country by more than 20 per cent while reducing them for the richest in society.
- If we were able to close the gap in income and inequality it would have a transformative effect, increasing incomes by over 40 per cent among the poorest fifth of the country, and around one third for the middle, without reducing incomes at the top (indeed, they would still rise slightly).
- This demonstrates the size of the prize available. A better future for the UK does not need global growth to suddenly accelerate, or Britain to match American levels of productivity and Scandinavian levels of inequality. It just requires us to catch up with similar countries who, in the scheme of things, are not so very different to us. There is a lot to play for, especially for those on low-to-middle incomes.
- The next step is to design the policies for us to achieve a richer and fairer Britain. The second phase of The Economy 2030 Inquiry will undertake this detailed work to contribute to debates on how Britain navigates the 2020s.