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Monday, Aug 11, 2025

Britain is running out of new ideas and it's killing productivity

Britain is running out of new ideas and it's killing productivity

It is no secret that Britain is in a productivity slump. The statistics should be familiar. In the decade before the pandemic, productivity grew at just 0.3 per cent per year. Before the financial crisis, it grew at 2 per cent. That might sound like an abstract or wonkish concern, but it is the difference between wages doubling every 35 years and wages doubling every 231 years.
In the short run, there are clear ways to lift our productivity levels closer to American or German levels. To their credit, the Government is implementing many of them. Reforming the planning system, a super-deduction for investment in productivity-boosting machinery, and a Help to Grow scheme to improve management skills will all help.

The above policies will bring us closer to the frontier, but pushing the frontier forward consistently is what really matters. In a way, the solution is simple: have more ideas. But it’s easier said than done.

When economists from Stanford and the LSE investigated whether ideas are getting harder to find, the answer was a clear “yes”. We now need eighteen times as many researchers to achieve a doubling of computer chip density, the famous Moore’s law, than we did in the 70s. Economists Ben Southwood and Tyler Cowen find similarly concerning trends across a range of scientific fields. We are getting fewer transformative discoveries even though the number of PhD researchers has surged over the past few decades.

If we can’t figure out how to reverse these worrying trends, then we will remain stuck. Our ability to solve our greatest problems from climate change to pandemics will be limited.

The Nobel Prize-Winning economist Robert Lucas once said of economic growth: “The consequences for human welfare involved in questions like these are simply staggering: once one starts to think about them, it is hard to think about anything else.”

In a foreword to a new essay collection, Patrick Collison, the co-founder of Stripe, observed that “many of the most important considerations that will determine the long-run rate of economic growth are not the foremost policy issues of our day.” How long do journalists spend reporting on the way we fund research? Even Dominic Cummings struggled to get it on the agenda.

It’s a concern shared by former Prime Minister Tony Blair. On technology he writes in the preface that “too often policymakers either ignore its importance or focus on questions like those to do with privacy which are important but limited; when the real debate should be around how we use technology to usher in a new advance for humankind.”

There may be a silver lining to the neglect: there is no culture war or partisan fight to worry about. In many cases, the low-hanging fruit has not been picked.

Take the way we fund scientific research for an example. A few recent studies suggest that radically different funding mechanisms could deliver substantial gains and liberate researchers from bureaucratic grant applications. Yet, the topic is under-studied. We ironically don’t apply the scientific method to science funding itself.

Or look at our approach to high-skilled immigration. We take a “build it and they will come” approach. At a stretch, we might create specialist visas. But we are in competition for global talent. Why not take a leaf out of the Premier League’s book? They invest serious money into scouting the next Neymar, Messi, and Salah. We could take a similar approach to scientific talent. The Government could fund scholarships at top universities for high-achievers at the International Math Olympiad.

These are just two ideas. We also need to make government procurement more open to new ideas, digitise the state to eliminate unnecessary frictions in civic life, and promote innovation to the next generation – through a 21st Century Great Exhibition.

In some fields, we have seen dramatic technological progress in the past year. CRISPR gene-editing is curing fatal genetic disorders, mRNA vaccines are bringing an end to the pandemic, and falling sequencing costs are enabling us to track new variants. Each technology is in its infancy, but has the potential to transform our lives. Imagine a world where every genetic disorder was easily treatable, where routine blood tests allow us to stop cancers at an extremely early-stage, and where infectious diseases are stamped out altogether.

It’s a future that is within reach. But we should be more impatient, more urgent. Boris Johnson wants to make the UK a science superpower. It’s the right rhetoric, but now is the time for action.
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