Monday 9 September 2013 10:59 pm

Damaged UK growth could linger for years

Weak economic growth may now be the norm for the British economy unless major reforms are undertaken, according to a report out this morning. New research by the Institute of Economic Affairs (IEA) claims that after the longest crisis in British economic history, the country may not ever be able to return to previously typical levels of business expansion. The UK had an average annual growth rate of around 2.5 per cent in the years before the financial crisis hit. But that sustainable growth rate may have been trimmed down to around one per cent now, the report says, due to falling productivity, increased public spending, higher debt and a number of other long-term changes to the economy. The authors claim exaggerated growth in credit gave many industries a misleading appearance of health before the crisis, which could not be carried on in the long term. Lower public spending, leaner regulation and a national infrastructure bank to provide long-term financing to large government projects are all suggested as potential solutions.