For the past decade, the UK has had an average growth rate of barely 1% per year – a level of growth which simply isn’t high enough to support the needs of our people.
Economic growth is the key to achieving higher levels of prosperity. We believe that Britain’s policymakers should reject the status quo and raise their sights to a much higher level of growth for which we would all benefit – to that of 3% per year.
Securing long-term growth will create more sustainable job opportunities and increase revenue for the treasury.
From mitigating against climate change to increasing demand on social care services and the National Health Service, Britain is faced with many long-term funding challenges, and only by having a higher rate of growth can we possibly afford to meet those.
To reach close to 3% growth and to compete with the rest of the world, the UK needs a new, bold economic vision and approach that tackles fundamental flaws in the UK economy.
The John Mills Institute for Prosperity believes this must start by increasing levels of investment, which stands at 17% per year – much less than the world average at 26%. Staggeringly, only 2.7% of that investment is made in sectors where higher rates of return are achieved – machinery, technology and power.
The UK must also invest in its depleted manufacturing industry, which is in fast decline. Today, manufacturing makes up less than 10% of our GDP. To rebalance the UK economy, we need to increase manufacturing to 15% of GDP, which would complement our successful services sector.
In the third episode of Talking Manufacturing, Sir Vince Cable, former Leader of the Liberal Democrats, discusses the structural problems that are impacting the ability of British manufacturers to secure funding, and some of the strengths and difficulties faced by the industry today.
Our Director at JMI, Brendan Chilton, writes on a broader industrial strategy for addressing rampant regional inequalities with manufacturing-led economic growth at its heart.
JMI founder John Mills joined our director Brendan Chilton to sit down for a podcast series discussing the economic insights presented in Mills's new book, Why the West is Failing.