Why is the UK's economic growth falling behind?

Poor economic growth and productivity in the UK is due to several factors that are our own fault, says David C. Stevenson

UK flag with stock market finance, economy trend graph digital technology
(Image credit: Getty Images)

I spend a lot of time looking through research papers and think-tank notes afflicted with a disease I call “policy lever-itus”. This painful affliction consists of undue regard for big-picture thinking about why economic growth is so poor in the UK (and in much of Europe). Pointy-head types (me included, sometimes) tend to think that there is an endless supply of policy levers that can be yanked up and down to boost growth. Underlying these assumptions are the notions that major changes can affect complex challenges and that governments can make a difference.

Now governments can indeed make a difference; policy changes, especially around planning, can help. I suggest reading an influential report by Sam Bowman, Ben Southwood and Samuel Hughes called “Foundations: Why Britain has stagnated”, which in effect argues that Britain has essentially banned investment in the most important physical infrastructure it needs to grow: housing, electricity pylons, railways, roads, data centres, nuclear reactors, tramways, and more. And when it does build these things, their prices rise to astronomical levels due to the regulatory, legal and administrative costs they face.

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David C. Stevenson
Contributor

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com

David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space. 

Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business. 

David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust. 

In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.