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From austerity to prosperity: Seven priorities for the long term in the United Kingdom

Over the last 15 years the UK’s productivity growth has been encouraging, matching the strong performance of the United States and closing the productivity gap with the EU-15. Overall productivity levels, however, are still nearly 20 percent below the US and 10 percent lower than those of Germany.

The UK enjoys relatively high rates of labor participation (nearly five percentage points higher than the OECD average) and relatively low unemployment. But regional imbalances remain a concern—around half of economic growth over the last decade was concentrated in Greater London and its neighboring regions—and too much recent employment growth has been in the public sector (from 1999 to 2009, the public sector workforce grew by 800,000). Moreover, there is a need to build resilience by managing down high public deficits and private debt levels, and taking practical steps to offset the economic effects of our ageing population.

Beyond the downturn, MGI identifies seven priority areas that, if tackled, will allow the UK to achieve sustained growth over the next two decades:

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