Britain’s government needs to abandon policy reversals and show greater ambition on trade, housing construction and labour-market reforms if it hopes to build on early signs of economic improvement, according to a new report by the Resolution Foundation.
Eighteen months after Prime Minister Keir Starmer’s decisive election victory, the think tank said the administration’s record has largely been defined by U-turns, tentative tax proposals and a lack of resolve, rather than sustained reform.
“With indications that productivity could be starting to recover, the government must seize the moment by accelerating its agenda,” said Greg Thwaites, research director at the Resolution Foundation.
Starmer and Chancellor Rachel Reeves have pledged to boost economic growth, but the report said progress has been limited. It noted that momentum has not significantly increased and that planned reforms, including changes to welfare and taxation, have either been scaled back or abandoned altogether.
According to the think tank, reforms such as easing planning rules to help cities meet housing targets, aligning regulations more closely with the European Union, and encouraging greater participation in the workforce among both younger and older people could raise average household incomes by about £2,000 ($2,680) a year.
Such growth, it added, could also generate enough additional tax revenue to lift public health spending by around 25%.
Britain’s economy has remained largely stagnant for much of the period since the global financial crisis, with output per person falling further behind that of other major European economies following the pandemic.
The combined effects of COVID-19, soaring energy costs and Brexit have weighed heavily on productivity growth. The report said mounting evidence suggests the economic damage from Brexit may already be close to twice the 4% impact assumed by official government forecasters.
Despite these challenges, productivity rose sharply, increasing by 3.1% in the year to the end of the third quarter of 2025. The think tank said this figure reflects adjustments for previously underreported employment, using payroll data rather than earlier official estimates.