Rebalancing Act

As the new government seeks to rebuild the UK's economy and lead the country into recovery, the concept of economic "balance" has come to the fore.

Download the Rebalancing Act report (PDF 1.75Mb)

After a period of heated debate on deficit reduction, the subject of economic growth has reentered the political consciousness. This is welcome: sound public finances are essential to the recovery, but not sufficient. The deficit will not be reduced solely by reducing government spending.

Recent speeches by the Prime Minister and the Secretary of State for Business, Innovation and Skills have raised the vital question of growth, and put the idea of rebalancing the economy at the front and centre of political debate. In particular, both speeches raised the issue of sectoral rebalancing - what will take the place of the economic growth that for so long was provided by the UK's financial services sector.

This is a controversial subject, with some commentators advocating a relentless focus on promoting manufacturing, and others insist that financial and business services are the only areas in which the UK can prosper.

This report seeks to move the debate forward with data and analysis. It looks at a number of scenarios for a rebalanced economy, and asks two important questions: what is realistic, and what is desirable for the country. It highlights the vital role of innovation and high-tech industries in driving sustainable growth, and looks at what government can do with limited resources to make this happen.

Published
June 2010

Author
Shantha Shanmugalingam, Ruth Puttick and Stian Westlake