Extra £47bn investment needed to boost UK economic recovery

·3 min read
Bidenomics: £47bn in extra investment needed to boost UK economic recovery. Photo: Evan Vucci/AP
A new report has urged the UK government to be more like Joe Biden in its economic thinking. Photo: Evan Vucci/AP

A think tank has called for £47bn ($64.1bn) in extra investment this year to help boost the UK and lift employment numbers. 

In a call to learn from "Bidenomics" the Institute for Public Policy Research (IPPR), suggests an approach akin to US president Joe Biden's stimulus package could benefit the UK, and would mean companies compete for workers rather than workers competing for jobs — driving up earnings and working conditions.

Measures such as a one-off windfall tax on firms that made excessive pandemic profits, a citizens’ wealth fund that invests in strategic sectors and a stimulus to deliver full employment form part of IPPR’s agenda for structural reform of the UK’s economy.

Merely boosting the current "structurally flawed" economy that channels rewards to a privileged few is not enough, warns the report. 

It argues that problems of deep unfairness within the economy have worsened during the pandemic.

“The UK suffers from concentrations and imbalances of power that are both a cause of some of our economy’s problems, and a barrier to solving them," said Carys Roberts, IPPR executive director. 

Read more: Businesses return £1.3bn in furlough cash

"The pandemic must mark the end of this era of growing inequality and the beginning of a new one, in which sharing opportunity across people and places is a core objective of economic and social policy."

Even before the pandemic, two in five full-time workers had seen a real-terms fall in their income over the previous decade. Now 5.5 million workers are in insecure work, of whom 960,000 are on zero-hours contracts — up from 168,000 in 2010. Some 2.5 million people work in roles that don’t match their skill level.

Meanwhile, the richest gained through the rising prices of their property and financial investments. Between June 2020 and June 2021, the average house price rose by £31,000 — equivalent to an average UK salary for an entire year.

The IPPR notes that market power and profits are overly concentrated within the top 1% of companies, squeezing out many smaller competitors. 

Since the pandemic began, just six tech firms have seen their profits triple, adding more than $4tn to their combined market value. Pharmaceuticals, healthcare and gaming companies have also gained significantly. 

Read more: Women disproportionately affected by £1bn state pension blunder

But small businesses are more likely to have closed or to have relied on government loans during lockdown — a quarter of the smallest firms that survive report debt repayment costs up by at least 20%.

The report argues that the pandemic must mark an end to constantly growing inequality and the beginning of a new era where opportunity is shared among all people and places, and justice is hard-wired into every policy decision.

“Most people do not want to see the economy go back to how it was working before the pandemic. There is a need for change, and our plan to hard-wire the economy for justice will ensure that the benefits of the recovery are shared with everyone," said George Dibb, head of the IPPR Centre for Economic Justice.

IPPR has called for four key power shifts to achieve this: To employees from employers; to companies that work in society’s interest, from those that extract from it; to those locked out of wealth from a system that has locked up wealth; and to the nations, regions and towns of the UK, from Whitehall and Westminster.

Watch: What is inflation and why is it important?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting