The UK’s sustained growth between 1997 and 2008 was fuelled by the importance of skills and new technology: rather than just austerity, the government should focus on building human capital and innovation to support long-term growth

Some commentators have argued that the prosperity boom experienced under the last Labour government was a ‘free ride’ which benefited from the earlier policies of Margaret Thatcher and the Conservatives, and that Labour did little to improve the economy, leaving it in a more vulnerable state when the global recession came. New research from Anna Valero, John Van Reenen and Dan Corry takes an in-depth look at the UK’s GDP and productivity growth between 1997 and 2010, and finds that many of Labour’s policies were beneficial for economic growth, and that this growth was not all an unsustainable ‘bubble’, but was based on some real productivity increases fed by growth in new skills and technology. However, in some areas, such financial regulation Labour’s policies clearly failed. Using this evidence, the authors recommend the chancellor slows fiscal consolidation, and more importantly, develops an explicit growth strategy around human capital, infrastructure and innovation.