Report

The aspiration for public investment

This report from UK think tank the NIESR recommends targeted public investment projects in key areas such as housing, transport connectivity, education and skills.

Analysis of the UK finds that, over the last five years, the gap in living standards between the prosperous parts of the United Kingdom and poorer areas has widened, and productivity differences have also increased.

We highlight that public investment will need to increase from current levels of about 2.5 per cent of GDP per year to about 5 per cent, equivalent to an extra £50 billion a year, approximately, if the UK economy is to succeed in the long term.

More specifically, we recommend targeted public investment projects in key areas such as housing, transport connectivity, education and skills, with close coordination of a national growth strategy with local and regional growth plans.

This boost to public – as well as private – investment is the first essential step to start resolving the four major issues the new government has inherited, namely: • Low trend productivity growth • A fiscal framework that is stifling much-needed public investment • Declining living standards for the least well-off • Persistent regional inequality