Growth Mindset | How much growth could the Government’s reforms deliver?

The past 15 years of economic stagnation has caused families’ living standards to flatline, and the new Government is right to put ‘kickstarting’ growth at the heart of its agenda. Already, Ministers have set out what many of their pro-growth reforms will be – from reforming planning rules to delivering 1.5 million homes, to setting up Great British Energy, devolving more power to City mayors, and creating a new deal for workers. Delivering these policies is a huge challenge in itself – but will they do enough to kickstart growth?

1. September 24 @resfoundation A build-up economic strategy How much growth could the Government’s reforms deliver? Rupert Harrison, Former Chief of staff to George Osborne Stian Westlake, ESRC Executive Chair Rebecca Riley, Professor of Practice in Economics, Kings College London Emily Fry, Senior Economist, The Resolution Foundation Chair: David Willetts, President, The Resolution Foundation

2. 2 Average annual forecast growth rate of GDP per person, G7 countries, 2024-29  Source: IMF World Economic Outlook Database April 2024; RF calculations @resfoundation The UK has had sluggish productivity growth since 2007

3. 3 Average annual forecast growth rate of GDP per person, G7 countries, 2024-29  Source: IMF World Economic Outlook Database April 2024; RF calculations @resfoundation Low growth = stagnant living standards £1,700 of missed wages

4. 4 Average annual forecast growth rate of GDP per person, G7 countries, 2024-29  Source: IMF World Economic Outlook Database April 2024; RF calculations @resfoundation Low growth = stagnant living standards & tight public finances £1,700 of missed wages

5. 5 Average annual forecast growth rate of GDP per person, G7 countries, 2024-29  Source: IMF World Economic Outlook Database April 2024; RF calculations @resfoundation The Government’s growth mission…

6. 6 Average annual forecast growth rate of GDP per person, G7 countries, 2024-29  Source: IMF World Economic Outlook Database April 2024; RF calculations @resfoundation …to secure the highest sustained growth in the G7

7. Supply side policies can boost growth through: People Capital Total factor productivity We estimate how the Government’s first policies can impact growth: Infrastructure Housing Trade 7 The Government has focussed on supply side reforms, and rightly so @resfoundation

8. Making the costs of building cheaper: Repealing the onshore wind ban Planning reform ‘Crowding in’ investment: The National Wealth Fund (capitalised at £7.3 billion) Green Prosperity Plan (£4.7 billion per annum) Great British Energy (capitalised at £8.3 billion) 8 Announcements on infrastructure will boost growth modestly @resfoundation

9. 9 Net additional dwellings as a share of stock, actual and target: England, 1971 to 2029 Notes: Data on net addition dwellings is in calendar years until 1991-92. Data on completions is in fiscal years throughout. 1990-91 data not included since this does not exist for net additional dwellings. Source: RF analysis of MHCLG, Live table 104. @resfoundation New housing targets will require a big acceleration in building

10. 10 Annual targets as a share of existing housing stock by TTWA affordability and productivity deciles: England, 2022 Source: RF analysis of live tables on housing supply from Ministry of Housing, Communities and Local Government, ONS UK GVA and productivity estimates for other geographic areas, ONS Housing affordability in England and Wales, and the formulas for the previous Government and new Government’s house-building targets. @resfoundation These targets focus on affordability…

11. 11 Annual targets as a share of existing housing stock by TTWA affordability and productivity deciles: England, 2022 Source: RF analysis of live tables on housing supply from Ministry of Housing, Communities and Local Government, ONS UK GVA and productivity estimates for other geographic areas, ONS Housing affordability in England and Wales, and the formulas for the previous Government and new Government’s house-building targets. @resfoundation These targets focus on affordability over productivity…

12. 12 Annual targets as a share of existing housing stock and productivity by travel to work area: England, 2021/2022 Source: RF analysis of live tables on housing supply from Ministry of Housing, Communities and Local Government, ONS UK GVA and productivity estimates for other geographic areas, ONS Housing affordability in England and Wales, and the formulas for the previous Government and new Government’s house-building targets. @resfoundation …neglecting highly productive areas and cities outside of London

13. 13 To boost growth, the Government needs be bolder on trade @resfoundation Photo by  Lechon Kirb  on  Unsplash

14. 14 Annual GDP per capita growth, and impact by measure within this Parliament: UK Notes: This chart combines IMF forecasts for average GDP per capita growth for 2024 to 2029, with estimates of the average growth impact from trade, and the maximal growth impacts from infrastructure and housebuilding given that these take time to ramp up. Source: RF analysis of IMF World Economic Outlook Database April 2024; ONS; MCHLG; S Dhingra, E Fry, S Hale & N Jia, The Big Brexit: An assessment of the scale of change to come from Brexit, Resolution Foundation, June 2022. @resfoundation Turning around the UK’s growth is going to be tough

15. 15 Annual GDP per capita growth, and impact by measure within this Parliament: UK Notes: This chart combines IMF forecasts for average GDP per capita growth for 2024 to 2029, with estimates of the average growth impact from trade, and the maximal growth impacts from infrastructure and housebuilding given that these take time to ramp up. Source: RF analysis of IMF World Economic Outlook Database April 2024; ONS; MCHLG; S Dhingra, E Fry, S Hale & N Jia, The Big Brexit: An assessment of the scale of change to come from Brexit, Resolution Foundation, June 2022. @resfoundation But infrastructure…

16. 16 Annual GDP per capita growth, and impact by measure within this Parliament: UK Notes: This chart combines IMF forecasts for average GDP per capita growth for 2024 to 2029, with estimates of the average growth impact from trade, and the maximal growth impacts from infrastructure and housebuilding given that these take time to ramp up. Source: RF analysis of IMF World Economic Outlook Database April 2024; ONS; MCHLG; S Dhingra, E Fry, S Hale & N Jia, The Big Brexit: An assessment of the scale of change to come from Brexit, Resolution Foundation, June 2022. @resfoundation But infrastructure and housing…

17. 17 Annual GDP per capita growth, and impact by measure within this Parliament: UK Notes: This chart combines IMF forecasts for average GDP per capita growth for 2024 to 2029, with estimates of the average growth impact from trade, and the maximal growth impacts from infrastructure and housebuilding given that these take time to ramp up. Source: RF analysis of IMF World Economic Outlook Database April 2024; ONS; MCHLG; S Dhingra, E Fry, S Hale & N Jia, The Big Brexit: An assessment of the scale of change to come from Brexit, Resolution Foundation, June 2022. @resfoundation But infrastructure and housing halve the gap to the US

18. 18 Annual GDP per capita growth, and impact by measure within this Parliament: UK Notes: This chart combines IMF forecasts for average GDP per capita growth for 2024 to 2029, with estimates of the average growth impact from trade, and the maximal growth impacts from infrastructure and housebuilding given that these take time to ramp up. Source: RF analysis of IMF World Economic Outlook Database April 2024; ONS; MCHLG; S Dhingra, E Fry, S Hale & N Jia, The Big Brexit: An assessment of the scale of change to come from Brexit, Resolution Foundation, June 2022. @resfoundation And the Government can do more to boost trade and housing

19. The Government’s growth goal is ambitious And current policies to achieve this are sensible But (1) the current policies are not enough and (2) not yet part of a strategy 19 So what? @resfoundation

20. September 24 @resfoundation A build-up economic strategy How much growth could the Government’s reforms deliver? Rupert Harrison, Former Chief of staff to George Osborne Stian Westlake, ESRC Executive Chair Rebecca Riley, Professor of Practice in Economics, Kings College London Emily Fry, Senior Economist, The Resolution Foundation Chair: David Willetts, President, The Resolution Foundation