Prime Minister Cameron waves on the steps of 10 Downing Street, May 2010 ©Cathal McNaughton/Reuters

Advice for Britain

Remember New Labour? The election triumph of Tony Blair’s Labour Party in 1997 captivated the world.

The British economy had started to recover at the time, at least according to the economic data. The outgoing Conservative Chancellor of the Exchequer, Kenneth Clarke, pleaded that “the feel good factor” would soon follow. But the people wanted change and swept Labour to victory.

 Now, 13 years later, Mr Clarke is back in government, this time as lord chancellor and secretary of state for justice Again, a recession weary electorate wanted change, and change they got when David Cameron took over as prime minister at number 10 after another captivating general election this May. Mr Cameron is the youngest prime minister in nearly 200 years, while the Conservative-Liberal coalition government he leads with deputy prime minister, Nick Clegg, is the first full coalition in the UK since the Second World War.

The economic landscape could not be more different this time either. Britain’s economy has been struck hard by the crisis, with a burgeoning fiscal deficit, rising unemployment and deep market uncertainty.

Thankfully, the UK’s GDP is now rising, albeit slowly–the OECD forecasts growth of 1.3% this year, firming to 2.5% in 2011; these are about average for the EU, but lag behind the US and Japan. More effort is needed to shake off the crisis, and that, the new government realises, means reform. A compact new OECD report entitled United Kingdom: Policies for a Sustainable Recovery, issued in July, offers some useful guidance.

As Secretary-General Angel Gurría puts it, the challenge is to build a new growth model based on the country’s exceptional economic and social strengths, and that demands a strategy “to instil confidence and boost growth”.

The OECD report sets out a series of action plans based on its knowledge of the UK and experiences from other countries. The plans cover everything from financial markets and tax policies, through innovation and green growth, to education, employment and health care. Action plans are drawn up for governance and regional policy too.

Take financial markets for instance. The City of London is one of the most powerful, fast-growing financial centres in the world, with banking assets over five times UK GDP. But with such a global industry, policymakers have traditionally been wary of regulation that might undermine its competitiveness and see talent, and business, leaking abroad. But now, the crisis has underlined how important sound regulation and supervision are for financial institutions and the economy to thrive. The OECD report offers several recommendations, including strengthening capital adequacy standards to ensure banks have a cushion for risks to be undertaken, and requiring banks to hold enough capital for off-balance sheet risks. A leverage ratio should be a primary tool, argues the report. Also, there should be a “firewall” between higher risk investment banking and commercial banking, the report says, and it also emphasises the need to promote consumer protection through education.

In fact, education is one area the report would like to see more action, not just to improve value for money but to boost student performance. Perhaps the biggest challenge, the authors say, is to reduce the proportion of pupils leaving school without qualifications. Roughly a quarter of the country’s 15-19 year-olds are not in education, compared with an OECD average of 16%. Among the recommendations the report emphasises simplifying and stabilising vocational education and training, to enhance employer engagement and provide an attractive option for students to stay on.

Education underpins innovation, which, as the report notes, was behind most labour productivity gains in the UK in recent years. Interestingly, the UK performs pretty well in scientific research and learned publishing, and in attracting venture capital. But it should do better in transforming this know-how into productivity, and for this, the markets should be made to work better at rewarding innovators, the report says.

The OECD report does not claim to be armed with silver bullets for what are, after all, complex challenges in a major economy. But it nevertheless contains useful policy pointers for restoring long-term growth, and who knows, perhaps “the feel good factor”, too.

For more recent data on the United Kingdom and all OECD countries, see the latest OECD Economic outlook interim assessment here.

See also and

©OECD Observer No 280, July 2010

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Subscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • MCM logo
  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2019