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After the longest and deepest downturn since full records began in the mid-1950s,
the British economy is officially out of recession and, at least until the contraction in
the last three months of 2010, had four consecutive quarters of growth up to the
end of September 2010. Unemployment is likely to rise further, but so far the extent
of job losses has not been as bad as expected based on the experience of the past
three recessions – those of the mid-1970s, the early 1980s and the early 1990s.
At the same time, the financial crisis and the economic damage associated with it
have created an almost unprecedented ‘hole’ in the public finances, which needs to
be addressed over the coming years. Decisions by the coalition government on the
appropriate balance between spending cuts and tax increases in its plan for ‘fiscal
consolidation’ indicate that the country will experience the longest and deepest
period of cuts to public services since the Second World War.
Britain faces the enormous challenge of tackling the deficit while reigniting sustainable
economic growth that delivers a fairer society. Reform of the financial system (which
was the immediate source of the recession) is also vital – this is a matter of global
concern. And there are many longer-term questions to ensure that the recovery is
helping and not hindering national engagement with growing global competition,
migration and the challenges of climate change and global poverty.
This report outlines some of these challenges, looks at policy options and explores
what can be learned by looking at evidence from economic and social research.
The report draws on analysis of a broad range of data sources and the work of
numerous researchers and research institutions, many of them centres, programmes
and individual scholars funded by the Economic and Social Research Council (ESRC).