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UK needs new plan to reverse hit to living standards, researchers say

People walk alongside the City of London financial district in London, Britain, October 25, 2023. REUTERS/ Susannah Ireland/File Photo
Unemployment rate unchanged but signs point to cooling jobs market

Britain needs a new economic strategy to reverse 15 years of falling living standards and worsening inequality, a leading think tank and an academic research centre said on Monday.

British productivity growth has been half that of other rich economies, costing workers an average of 10,700 pounds a year in lost pay, the Resolution Foundation and the London School of Economics’ Centre for Economic Performance said.

They were due to publish the concluding report of a research project entitled “The Economy 2030” at an event expected to be attended by finance minister Jeremy Hunt and the leader of the opposition Labour Party, Keir Starmer.

Both the ruling Conservative Party and Starmer’s Labour have pledged to speed up Britain’s slow pace of economic growth as they prepare for a national election expected in 2024.

“There is no excuse for fatalism,” Torsten Bell, chief executive of the Resolution Foundation, said.

“Closing the gap with peers like Australia, France and Germany would deliver huge living standards gains, with typical households over 8,000 pounds better off.”

Britain should shape its trade policy to focus on its strong services firms, boost transport investment in big cities such as Birmingham and Manchester, and fix the lowest public investment record among the Group of Seven economies, the report said.

Tax incentives should be aimed at young firms and individuals should be encouraged to take more business risks with higher unemployment insurance if they fail, it recommended.

($1 = 0.7881 pounds)

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