Britain should invest an additional £50 billion ($64 billion) annually, primarily through public borrowing, to enhance productivity and foster long-term growth, according to a recommendation from the National Institute of Economic and Social Research (NIESR). NIESR projects that the UK's economy will grow by only 1.1 per cent this year and does not expect growth to exceed 1.3 per cent annually through 2029. This falls short of the 2.5 per cent growth target proposed by Prime Minister Keir Starmer during the recent election campaign. Stephen Millard, NIESR Deputy Director, expressed doubt about meeting the 2.5 per cent target but noted that Labour finance minister Rachel Reeves' goal of achieving the fastest G7 growth in economic output per head for two consecutive years might be more realistic. NIESR suggests doubling public investment to 5 per cent of national income for sectors like transport and education, exceeding other wealthy nations' levels. Despite this recommendation, Reeves has prioritised fiscal prudence, recently cancelling smaller investment projects due to a worse-than-expected economic situation inherited from the previous Conservative government. NIESR Director Jagjit Chadha cautioned about the government's capacity to spend wisely and warned that focussing solely on fiscal rules could hinder addressing long-term economic challenges. Attribution: Reuters
