This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
This is the report summary, read the full report.
UK plc has many strengths, but as a country we must constantly innovate, adapt, and prepare for the future. Global competition is strong and our two largest trading partners—the European Union and the United States—are investing significantly in their own economies.
Alongside other advanced economies, the UK has an ageing population. This trend will continue in the years ahead, with more people entering retirement and fewer people being in work and paying income tax and national insurance.
UK plc is also having to adapt to the UK’s departure from the European Union, to reflect new trading arrangements—especially for service exports—and to adapt to new pressures on supply chains that were once seamlessly integrated into the European Union single market.
UK plc, in partnership with Government, must find a way to adapt to these macro-changes and create the space for economic growth and opportunity across the United Kingdom.
These challenges are reflected in the economic growth statistics, which show that the UK has been impacted by several events in recent years, including the COVID-19 pandemic and an energy crisis inflamed by the illegal invasion of Ukraine by Russia. This has inevitably created uncertainty for business and has limited economic growth.
According to recent IMF figures, the UK is the only advanced economy that is projected to contract in 2023, with a real GDP growth projection of -0.6% due to other key factors such as rising energy prices, a tight labour market, and inflation. The Office for National Statistics (ONS) has estimated that the UK is the only G7 country to come out of the COVID-19 pandemic smaller in size of GDP than at the start of the pandemic.
The UK has several leading sectors in terms of exports which provide billions in value to the UK economy annually. The UK is a service export superpower, second only to the United States. But productivity in the UK is currently below what it should be, and increased business investment in skills, workers, and technology is needed to increase this productivity. More Government support for skills development should be directed to upskilling existing members of the workforce, for instance to work towards a net zero and digital future, whether through reform of the apprenticeship levy or other mechanisms.
Regional disparities in productivity are limiting the UK’s economic growth. A concentration of resources towards cities outside London and to improving regional productivity should be a priority for the country’s overall economic growth.
Regulation and the Government’s relationship with industry and regulators requires improvement. The UK’s exit from the European Union caused uncertainty for regulators and businesses. Witnesses were clear that regulation needed to be appropriate and developed by the Government in partnership with industry and others. Parliament too must reflect on how it can improve scrutiny of new areas which are subject to regulatory reform—especially when by regulators—following the UK’s departure from the European Union.