LONDON, Jan 19 (Reuters) – Britain’s government must stop flip-flopping on key policies and be bold on trade, house-building and employment reforms if it wants to build on some nascent signs of improvement in the economy, a leading think tank said on Monday.
In the 18 months since Prime Minister Keir Starmer’s emphatic election victory, the government’s record has been mostly one of U-turns, kite-flying on tax ideas and timidity, the Resolution Foundation said in a report.
“With signs that productivity may be turning a corner, the government must capitalise by ramping up its plans,” Greg Thwaites, research director at the Resolution Foundation, said.
Starmer and finance minister Rachel Reeves have promised voters they will speed up the economy but so far there has been no significant change in pace and planned reforms in areas such as welfare and tax have been dropped or watered down.
The Resolution Foundation said planning changes to help cities hit housing targets, deeper regulation alignment with the European Union and getting more young and old people into work could boost household incomes by 2,000 pounds ($2,680) a year.
That kind of growth would also generate enough tax revenue, to increase spending on the public health service by a quarter.
Britain’s economy has stagnated for much of the almost two decades since the global financial crisis and GDP per person has fallen further behind that of other big European countries since the pandemic, the think tank said.
The shocks from COVID, high energy prices and the impact of Brexit led to a drop in productivity growth.
The report said there was growing evidence that the hit to the economy from Brexit could already be close to double the 4% impact assumed by Britain’s official budget forecasters.
But productivity leapt by 3.1% over the year to the end of the third quarter in 2025, adjusting for past under-recording of employment in official data by using payroll figures, it said.
($1 = 0.7463 pounds)
(Writing by William Schomberg, editing by Andy Bruce)
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