The UK faces major economic, social and environmental challenges, which include fixing ailing productivity, boosting social mobility and meeting climate targets. Each will require learning lessons from the country’s past and implementing clear and focused policy.
The first event of this year’s Bristol Festival of Economics may not have been the most cheerful opener to a three-day examination of Britain’s past, present and future.
But by taking a sweeping look at the mis-steps of the last 50 years, economic historian Russell Jones gave much-needed context for why the UK is where it is now – and what we can do to address the profound malaises affecting the country.
In a discussion with me of his new book, The Tyranny of Nostalgia, Russell took a rigorous look at decades of government and economic mismanagement, from Thatcher to Brexit. It amounted to what he called a ‘declinist manifesto’.
Most clearly on his list is that peculiarly British tendency for nostalgia – of seeking to resurrect a supposedly glorious history, tinged by imperialism and power, increasingly far removed from the middling income state that we are today.
The drive, Russell said, has led to an ‘impetuousness about policy’ across successive governments, most pursuing not well-planned economics but a ‘desperate search for some kind of panacea which could, at a stroke, lead us back to the great years of the past’.
Successive governments have seesawed through policies – from fixed exchange rates to indicative planning to monetarism – without success. One thing that eventually worked – ‘inflation targeting under the auspices of an independent central bank’ – only happened because ‘there wasn't anything else left for us to go to’.
The legacy of this is a situation that many in the audience undoubtedly recognised: poor investment in infrastructure and education, slow economic growth, poor productivity and a shrinking share of global trade.
Russell told the audience that many commentators have taken exception to his narrative. But he argued that a sober look at mis-steps is necessary if we are to make better choices in the future. Without seriously weighing up ‘the problems that we're confronted by and the errors that we've made in the past, it will be impossible to address those issues’.
Productivity puzzle
In the day’s second event, the panel took a clear-sighted look at sluggish productivity – perhaps the UK’s ‘foundational problem’ said Sam Fleming (economics editor of the Financial Times).
Productivity growth in the UK has been significantly slower than other countries over the last decade; in 2023, productivity was 24% below what it would have been if it had risen at similar rates to before the global financial crisis of 2007-09.
How can we fix it? It’s easier said than done. Productivity isn’t well understood, pointed out Bart van Ark (director of the Productivity Institute): many people believe increasing it means more work for them, or even automation and joblessness.
But it matters. ‘You never see living standards rise without a big increase in productivity’, said Judy Stephenson (an economic historian at University College London, UCL). The current stalling levels of productivity, she says, mean that we could be at a ‘turning point for a very dramatic decline or a period of keeping up’.
Which is it? The panellists agreed that a lack of investment in infrastructure and skills is a big part of Britain’s productivity puzzle. They were also clear that something can be done to fix things – though the likelihood of the right changes being made is more uncertain.
Katy Riddington (a portfolio officer at the National Composites Centre) was optimistic. Making innovation drive productivity, she said, requires technology, reskilling and robust supply chains – ‘three legs of the stool’ to upscale novel ideas.
In towns like Port Talbot, declining heavy industry offers an opportunity to increase productivity by training and preparing local communities to benefit from sectors like green energy. This, Judy added, means investing in the ‘not very trendy’ fields of management, supply chains and services – the ‘joined up bits’ of the economy that can unlock efficiencies.
This won’t happen on its own. Unite’s Dariush Sokolov argued that the UK is in dire need of an industrial strategy that focuses on foundational industry, coordination and strategy, including a shift in the fiscal rules to recast the state as an ‘investor of first resort’.
Bart added that rather than ‘spreading the jam thinly across the country’, this may mean tough decisions for government, demanding focused, thoughtful investment on high-impact areas like healthcare or the net-zero transition ‘where there are strengths to build on’.
Climate questions
A lunchtime panel chaired by The Economist’s Gavin Jackson showed that the productivity puzzle cannot be separated from another foundational struggle of our moment: climate change.
Like productivity, at least some of the challenge comes down to communication. Jo Michell (University of the West of England) said that data could tell any number of stories about how our world is warming. But the reality is that we can only cap it at the crucial two degrees with ‘major policy changes’. In the words of Claire Pearce of Real Growth, ‘we are making progress, but we’re not making progress quick enough’.
But while change is necessary, people still need to be persuaded that it’s worth it. According to Ed Atkins (University of Bristol) ‘the best net-zero policies don’t have net or zero near them’. Many people now understand climate policies as a sacrifice, Ed said, but the right strategies bring benefits, from better jobs to warmer homes to more efficient public transport. Investment can be ‘not just a technical or legal obligation but an opportunity to improve the world’.
That means a more ambitious programme than just getting to net zero. But the panel agreed, largely, that this is the only way that net zero is possible. Several experts argued for ‘economic restructuring’ and ‘fundamental’ industrial strategy that ‘needs to pick winners’.
Port Talbot again came up as an example of what – potentially – could be done right, alongside other reasons to hope. Ed highlighted forward planning in Germany’s Ruhr valley, which trained workers and attracted new investment after the exit of heavy industry. And Amy Coulthard (Entrade) described nature markets that have funnelled investment into local areas by harnessing the value of biodiversity.
There is precedent, Amy said, for success. But it requires thinking expansively and going for ‘the highest benefit solution rather than the lowest cost’.
Moving on up
The day’s third panel, on social mobility, prompted participants to think about their own experiences.
Mehreen Khan, economics editor at The Times, reflected that her career journey might be held up as a social mobility success, as did other panellists with working class backgrounds, including Suzanne Rolt, who has worked with many of Bristol’s cultural and charitable organisation. But they also suggested that these personal experiences may be far from reflective of wider trends.
Social mobility, UCL’s Lindsey Macmillan told us, was ‘stagnant since the 1970s’ and is even worse now. ‘Your chances are pretty strongly directed by your family circumstances’, she said. In South Bristol, where Lou Davies leads Bedminster Down School, 40% of children are on free school meals and it often ‘feels like social mobility is something happening elsewhere’.
Obstacles to social mobility are also more nuanced. People in their 30s are now earning about the same relative to previous decades, said David Sturrock (Institute for Fiscal Studies). But the wealth of their family will have doubled. This means that the ‘Bank of Mum and Dad’ has more power to shift life chances materially. Suzanne shared, too, how insecure contracts, sometimes of just a few months, are locking young people out of careers unless they have access to family money.
What can we do? Lou described how schools are forced to step in to provide the basics that children need to get on. It’s not enough. Business and legislation should begin considering social class as a diversity focus: Lindsey said that disadvantaged people aren’t struggling to get good jobs because they aren’t applying for them.
Policy-makers, too, should consider bigger concerns: good housing, accessible public transport and redistribution through mechanisms like inheritance tax are all social mobility issues.
Colonial boomerang
The day’s final panel, chaired by the BBC’s Anu Anand, showed that these UK inequalities cannot be separated from global history.
Birkbeck academic Kojo Koram described British imperial history as a ‘boomerang’ that did not stay in the ‘colonial hinterlands’, but came ‘ricocheting back into the heart of empire’, as exploitative private capital, dehumanisation and violence shaped the ‘underbelly’ of declining living standards and inequality in the UK in 2024.
Economist Bishnupriya Gupta (University of Warwick) described how colonial legacies have shaped India’s education system, venerating certain groups while reducing others. And education consultant Margaret Simmons-Bird extended that critique to British education’s exclusion of black and brown children who don’t see their histories or selves written into curricula.
Jessica Moody, a University of Bristol lecturer on collective memory, believes that one thing that ‘needs to happen is a critical engagement with how things are remembered or not’. It is a process that memorably took place in Bristol with the downing of Colston’s statue, but it extends to school curricula, museums, politics and economics.
Ultimately, these colonial histories resonate with many of the day’s themes. Kojo ended the panel by describing how people are linking them with things like offshoring, tax evasion and the distribution of resources. ‘It’s causing people to think, who made these rules, where do they come from’.
That requires thinking seriously about contemporary politics and economics in a way that affects everyone’s lives, but it also demands a ‘shift from the idea that empire is just a black issue… making it more of a national story’.
