Britain’s standing at a crossroads where the old ways of doing things just aren’t cutting it anymore.
We’ve been coasting on outdated systems while other countries have been quietly getting ahead. If we’re serious about building a genuinely prosperous future rather than just managing decline, there are some fundamental priorities we need to tackle head-on. These aren’t your usual talking points; they’re the real structural issues that economists and researchers keep flagging up as the things actually holding us back right now. It’s time we get a move on and start confronting these problems head-on.
1. Fixing our chronic underinvestment problem
Britain invests way less in its businesses and infrastructure than pretty much any comparable country. If our business investment had kept pace with similar economies between 2008 and 2022, our GDP would be roughly 4% higher, which would mean an extra £1,250 a year in average wages for everyone.
It’s about more than just government spending as well. It’s also about getting private money flowing into businesses that want to grow. Other countries have sorted out how to unlock pension funds and private investment for their companies, while we’re leaving trillions sitting in cash deposits doing nothing for the economy.
2. Actually tackling the productivity crisis properly
Britain’s productivity has been absolutely terrible since 2008, growing at just 0.5% per year compared to over 2% historically. This means we’re 26% less productive than we would’ve been if we’d kept up our pre-2008 trend, which is mental when you think about it.
The problem’s not mysterious. It comes down to businesses not investing in new tech and equipment because they don’t have confidence in the economic climate. We need to give businesses real incentives to invest in productivity-boosting technologies and make it genuinely worth their while to take risks on growth.
3. Getting people back into work who’ve dropped out due to illness
There are now 2.8 million working-age people out of work because of long-term sickness, and this number’s been climbing since 2019. Britain’s the only major economy where this is happening, everyone else has seen economic inactivity fall since 2020.
That doesn’t mean forcing people who are genuinely unfit to work back into employment. It’s about fixing the NHS waiting lists that leave people stuck for months, addressing mental health properly, and tackling the social factors that are making people ill in the first place. The current approach of tightening benefits isn’t going to magically make sick people healthy.
4. Sorting out the planning system once and for all
The government’s finally having a proper go at planning reform, with mandatory housing targets and faster decisions on major projects. Early estimates reckon these reforms could add £7.5 billion to the economy over the next decade just by getting things built quicker.
This means councils can’t just keep blocking everything anymore, and developers will actually have to build houses once they get permission rather than sitting on land. The reforms are meant to push housebuilding to its highest level in 40 years, but they need to actually happen and not get watered down.
5. Rebuilding our relationship with the EU on trade
Brexit has made trading with our biggest market way more expensive and complicated, and new trade deals with other countries can’t make up for what we’ve lost. Research shows the increased barriers with the EU continue to reduce pressure on British firms to compete and innovate.
We don’t need to rejoin anything, but we do need to sort out a more sensible trading arrangement that doesn’t cost businesses a fortune in paperwork and delays. Other countries manage to have good trade relationships without being in political unions, and we need to swallow our pride and do the same.
6. Stopping policy chaos that makes businesses freeze
Britain’s got one of the most unpredictable policy environments in the developed world, with governments constantly changing their minds about major decisions. This uncertainty is a massive reason why business investment has been so weak because companies can’t plan when the rules keep changing.
We need multi-year commitments on things like tax policy and infrastructure spending that actually stick regardless of who’s in power. When businesses know the rules aren’t going to change every 18 months, they’ll actually invest in growing rather than just sitting tight and waiting.
7. Getting our pension funds to invest in British businesses
British pension funds put hardly any money into British companies compared to other countries. We’ve got £1.2 trillion sitting in cash deposits and ISAs that could be helping businesses grow, but instead it’s just earning almost nothing.
The government’s looking at pension reform to encourage more domestic investment without forcing it, which is sensible. Other countries have worked out how to get pension money flowing into their economies safely, and there’s no reason we can’t do the same to help businesses scale up.
8. Fixing the competition problem in key sectors
Too many British sectors are dominated by a small number of big players who don’t face enough pressure to innovate or improve. Weak competition lets low-productivity firms stick around when they should’ve been pushed out by better companies.
The government’s given the Competition and Markets Authority a new focus on supporting growth and investment, but this needs real teeth. We need to break up concentrated markets and make it easier for new companies to challenge established players rather than protecting incumbents.
9. Spreading growth beyond London and the South East
Too much infrastructure spending goes to London while other cities that could become major economic centres get the leftovers. This creates a cycle where businesses cluster in London because that’s where the infrastructure is, making regional inequality worse.
Genuine levelling up means major transport projects and digital infrastructure in cities like Birmingham, Manchester, Leeds, and Newcastle that can become real alternatives to London. The current approach of small pots of money here and there isn’t going to move the dial.
10. Making the tax system less of a mess
Britain’s tax system is incredibly complicated and uncertain, with thresholds frozen and reliefs constantly changing. Many businesses stay deliberately small to avoid VAT thresholds, and parents turn down promotions because the marginal tax rates on child benefit can hit 70%.
We need proper tax reform that makes the system simpler and more predictable. This means sorting out the cliff edges where earning slightly more costs you loads in lost benefits, and giving businesses longer-term certainty about what they’ll pay rather than constant tinkering.
11. Investing in skills that businesses actually need
Our skills training system is a complete shambles, with overlapping qualifications that employers don’t trust and workers don’t benefit from. Meanwhile, loads of people are stuck in jobs they’re overqualified for, while industries are desperate for specific skills nobody has.
We need employers and training providers working together from the start to create clear pathways from learning to actual jobs. This isn’t about pushing everyone towards university, it’s about giving people routes to well-paid work through proper vocational training that matches what the economy needs.
12. Addressing the health crisis driving people out of work
The long-term sickness crisis is hitting young people hardest, with 18-24 year olds showing massive increases in health-related inactivity. This shouldn’t be happening to the healthiest age group, but NHS waiting times and mental health service failures are leaving people stuck.
We need preventative healthcare that stops people getting seriously ill in the first place, not just crisis management when they’re already too sick to work. Countries that invest heavily in keeping people healthy have lower healthcare costs overall and healthier workforces, which is exactly what we need.
13. Unlocking business dynamism through better support for scaling up
British businesses are great at starting up, but terrible at scaling up compared to other countries. We’ve got loads of innovative small firms that struggle to access the finance and support they need to grow into major employers.
This means reforming how businesses access growth capital, making it easier for SMEs to get loans and investment, and removing the barriers that keep promising companies stuck at small scale. Job reallocation rates are lower now than they were 20 years ago, which shows our economy’s becoming less dynamic when it should be more flexible.
