The new ESRC report Recovery Britain presents findings from economic and social science research which provide a snapshot of what we know about our current economic situation, examines some of the challenges the UK faces after the downturn and explores what can be learned by looking at evidence from economic and social research.

The report provides 20 key challenges areas and a number of policy solutions. It 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 ESRC.

Some of the key topics covered include:

• Innovation policy: Innovation is a key driver of growth. When public money is tight, policy should focus more on direct spending on innovation and rather less on tax incentives, such as the research and development tax credit to companies.
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• Trade: The deep, rapid trade collapse following the financial crisis reflected the steep drop in global demand rather than a sudden increase in protectionist measures. But continued global trade integration remains key to economic growth.
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• Finance for small business: Support for start-ups through R&D grants, creating a EU-wide patent, strengthening universities and removing bureaucracy would all help improve the environment for the growth of small businesses.
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• Management practices: Firms with better management are more productive, more profitable and more likely to survive. Management practices – and hence productivity growth – can be improved by increasing skills, promoting competition and tax reform.
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• Exports: For Britain’s recovery both short- and long-term, the key trade issue is seeking to encourage an expansion of exports relative to imports. There is a tendency for the economy to pull in more imports than it generates in exports as it grows.
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• Financial regulation: The financial sector is going to be essential to sustaining the recovery. Policy must improve the financial sector’s resilience without damaging competition or competitiveness.

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