The government is looking to science, tech and outside London for growth
The UK has experienced low productivity growth compared to other OECD countries since the great financial crisis. Increasing productivity may be the key to growing GDP and building the economy post pandemic and Brexit, in particular:
- Promoting growth outside London will be a focus for growing the economy
- Existing strengths in science and technology will be leveraged to support innovation and entrepreneurship
- Significant investment in green infrastructure will be needed to achieve climate targets.
Could productivity be the solution to ensuring a strong post pandemic recovery? The government is looking to science, tech and outside London for growth.
UK productivity growth is declining1
A shift toward regional spending
Post Brexit the government is looking to ‘level up’ regional economies. Key initiatives include:
- Northern Powerhouse: A plan to boost local economies by investing in skills, innovation, transport and culture
- The UK National Infrastructure Bank (UKNIB) alternative financier of UK infrastructure projects based in Leeds
- Eight major UK ports will be reclassified as ‘freeports’, helping to rejuvenate key costal areas
New policies should support growth in UK tech and science
The UK has a strong education system and world-leading research universities. Leveraging these strengths, the UK government has strong ambitions for growing science and technology startups. This has led the government to focus on increasing funding, encouraging relevant talent, and reforming the process for companies listing in the UK.
Funding: new funding sources for business innovation
|Advanced Research & Invention Agency2||£800m||Funding high-risk/high-reward scientific research|
|The Future Fund3||£375m||Match private investment in UK tech startups up to £20m|
|Help to Grow4||£520m||Provide a 50% contribution (up to a maximum £5,000) towards the purchase of productivity enhancing software|
Talent: Leveraging domestic and international talent
The government has identified the Oxford-Cambridge Arc as a national economic priority. They are planning to improve connectivity, infrastructure and housing in a way that leverages the area's unique business, science and technology ecosystem. Additionally, the government unveiled a new visa system for science, research and tech workers, allowing those that filled specific criteria to obtain a visa without a sponsor.
UK listings: Reform for the London stock market to encourage listings
The UK Listings Review has proposed reforms that will allow founders to maintain a higher degree of control by reducing the requisite free float and introducing dual-class structures. Special purpose acquisition companies have also been allowed to ease the listing process.
A drive for decarbonisation will be a key underlying goal
In November 2020 the National Infrastructure Strategy was published with the title 'Fairer, Faster, Greener'. It is a document setting out government plans to level up the country and improve productivity, as well as highlighting the short-term imperative to boost economic growth following the COVID-19 pandemic. Future infrastructure projects include offshore wind investment and a network of charging points for electric vehicles. Green gilts have been introduced to help fund the projects, which you can read about here.
Other key policies
Read our white paper here to learn more about this topic and some of the other key policies that the UK could undertake over the coming years, such as:
- Pivoting towards Asia: The UK appears to be pivoting towards Asia for trade, and seems willing to use its military resources as a tool to improve relationships with Asian countries concerned about China’s regional dominance
- Trans-Pacific Partnership: Joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership sets a new trade agenda, but could be against a backdrop of declining trade with the European Union
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1Source: ONS, data to 31 December 2019. For illustrative purposes only.
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