In this video, we analyse the prospects for growth in the British economy. The UK’s economy has struggled to grow since the 2008 financial crisis and our GDP per capita is no higher than it was in 2007. Sure, the economic fallout from COVID-19 and the Eurozone Crisis are partly to blame, but there are systemic problems in the British Economy.

We focus on two - chronically low investment and poor labour productivity. The British workforce has not kept pace with improvements in worker productivity in other G7 countries like Germany and France, stopping our economy from growing.

Poor investment is partly to blame. Without investment, it's hard to get secure improvements in worker productivity through technological improvements. But partly this is also due to the shift away from industrial production. Fewer of our workers are in industries that can easily be improved, preventing economic growth.

The other major issue is that both public and private investment is low. The privatizations of the 1980s and austerity policies in the aftermath of the 2008 financial crisis have led to the lowest rate of public investment in the G7. Private investment has been scared off by expensive construction costs, excessive land regulations, and Brexit.

Unless the UK can effectively attract investors, the British economy is doomed to long-term stagnation.

Sources:

Centre for Economic Performance, “Growth and Productivity,” June 2024. [[ Ссылка ].]

Anna Valero and John Van Reenen, “How to grow the UK’s dwindling productivity,” LSE Blogs, 12 June 2024. [[ Ссылка ]]

John Van Reenen and Xuyi Yang, “Chronic under-investment has led to productivity slowdown in the UK,” LSE, 27 November 2023. [[ Ссылка ]].

Stephen Machin, “Britain needs a new economic strategy to end stagnation and close its £8,300 living standards gap with peers,” 4 December 2023. [[ Ссылка ]].

Ethan Ilzetzki, “If the UK is high tech, why is productivity growth slow? Economists weigh in,” LSE, 7 March 2020. [[ Ссылка ]]

Jagjit Chadha, “Boosting productiivty: why doesn’t the UK invest enough?,” Economics Observatory, 16 Jan 2024. [[ Ссылка ]]

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