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


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

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • 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.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa.
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on
  • 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 .

Most Popular Articles


What issue are you most concerned about in 2016?

Euro crisis
International conflict
Global warming

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 2016