Britain’s government needs to end its habit of policy reversals and show greater ambition on trade, housing construction and labour market reform if it is to build on the early, tentative signs of economic improvement, a leading think tank said on Monday.
In the 18 months since Prime Minister Keir Starmer’s decisive election win, the government’s approach has been characterised largely by U-turns, trial balloons on tax policy and a lack of bold decision-making, according to a new report from the Resolution Foundation.
The think tank argued that stronger and more consistent growth would also boost tax revenues sufficiently to allow spending on the National Health Service to rise by around a quarter.
Britain’s economy has been largely stagnant for much of the nearly two decades since the global financial crisis, with GDP per head falling even further behind that of other major European economies following the pandemic, the report said.
A combination of COVID-related disruption, surging energy costs and the effects of Brexit has weighed heavily on productivity growth. The report added that mounting evidence suggests the economic damage from Brexit could already be close to double the 4% impact assumed by the government’s official budget forecasters.
However, there were some more encouraging signs. After adjusting for previous undercounting of employment in official statistics by using payroll data, productivity rose by 3.1% in the year to the end of the third quarter of 2025, the think tank said.
