French Lessons for Britain’s Economy

Summary:

Since 2008 Britain’s economy has badly under-performed America’s, but on some key metrics it has also performed much worse than France’s. Analysis of the drivers of British, US and French growth shows that lagging private investment is the main cause of the UK’s growing productivity gap. Contrary to the popular view – that the biggest constraint on UK growth is its planning system – macro-economic forces have been crucial to the bigger productivity slowdown in Britain. The report argues that argues that the Labour government’s ‘industrial strategy’ should focus on professional services, tech, media, scientific research and other ‘knowledge services’, which have shown rapid growth in exports and output since 2016. They are also more Trump-proof, since tariffs are largely applied to manufactured goods. The report sets out reforms that would help those sectors to grow – many of which France has already enacted – including a wider set of assets that are eligible for investment tax breaks, policies to promote larger and denser urban labour markets, and less onerous immigration rules for knowledge workers.

• Alternative Source 1