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Britain has world-class universities, strong labour markets, leading industrial clusters, and a sophisticated financial market. We need to focus on structural constraints that stop these advantages turning into attractive investments.

The most important is to fix the sources of the UK’s cost disadvantages relative to other countries (planning, energy, infrastructure), but we must also improve financial markets by removing frictions - not forcing artificial allocations.

Trying to revive financial flows without addressing fundamental barriers to economic activity is like treating the symptoms and ignoring the disease. To achieve both, we propose two necessary conditions:

Overall, these effects are second-order. The fundamental issues of high input costs and availability: energy, industrial locations, and limited housing availability in key clusters create systematic disadvantages that no amount of capital can overcome.

Plus, once implemented, beneficiary interest groups will fight future reversal, locking in costly mistakes. If directing UK savings to underperforming assets ends up hurting returns, we'll be paying for it long after the policy fails.

But financial markets are not perfect. MiFID II reduced incentives for research coverage of smaller companies. Britain's 0.5% stamp duty is higher than most major markets. Pension fragmentation limits sophisticated investment.

The difference? Fintech operates where Britain has advantages: a strong sectoral cluster, low physical footprint, deep talent pools. Manufacturing firms or data centres face high energy costs and planning complexity.

We can see this in the divide between different types of companies: UK fintech (Revolut, Monzo) readily access capital. Manufacturing firms or those dependent on access to infrastructure struggle. Same financial system, very different outcomes.

If companies are struggling to find attractive opportunities, and persuading investors to part with their funds, simply channeling more capital towards them won't solve anything. That misdiagnoses the problem.

Forcing savers to invest in British companies addresses a symptom, but misses the underlying cause. It also ignores what companies are telling us. UK manufacturers cite 'uncertainty of demand' and 'inadequate returns' as their main investment barriers, not the 'cost of finance'.

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Ben Johnson @ersatzben.com · 01/05/2025

Will throwing more money at British companies actually help our economy? Politicians keep threatening to direct British savings & pensions to UK equities. But this won’t fix the underlying reasons for Britain’s low investment & productivity – and could deliver worse returns. 🧵

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How does R&D contribute to economic growth? A response to David Edgerton from me & @pedroserodio.com johnsonb.substack.com/p/r-and-d-do...

johnsonb.substack.com

R&D does drive growth – just not in the way you think

A response to David Edgerton.

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Centre for British Progress @britishprogress.org · 14/04/2025

The Progress Post: our new substack We'll look beyond policy to the cultural currents behind British progress, and the ideas, values, & visions that we're building towards. Today: our April newsletter, upcoming events, & bookshelf with pieces from @droojb.bsky.social & Jack Wiseman

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James O'Malley @jamesomalley.co.uk · 07/04/2025

New episode of THE ABUNDANCE AGENDA! Why we love Luton Airport, and a terrible plan for changing the London Mayoralty. Plus we speak to @davidlawrenceuk.bsky.social and @jujulemons.bsky.social about the launch of @britishprogress.bsky.social ! Listen: www.abundancepod.com/p/why-we-lov...

abundancepod.com

Why we love Luton Airport, and a terrible plan for changing the London Mayoralty

Plus the exciting launch of the Centre for British Progress

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pedroserodio.com @pedroserodio.com · 03/04/2025

Hoping that the more skilled half of the team can raise me up to their level.

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pedroserodio.com @pedroserodio.com · 03/04/2025

A big thank you to @jujulemons.bsky.social and @davidlawrenceuk.bsky.social for the invitation - I am thrilled to be working with the very talented team of @freddieposer.com, @ersatzben.bsky.social, @maxxturing.bsky.social , @droojb.bsky.social, and Tom Blake, as well as @lyan82.bsky.social.

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pedroserodio.com @pedroserodio.com · 03/04/2025

Now that all the top people have made their announcements, we shouldn't overlook the bottom half of the productivity distribution: I am extremely pleased to be joining @britishprogress.bsky.social as Chief Economist! bsky.app/profile/brit...

britishprogress.org

Rediscovering British Progress

The founding essay of the Centre for British Progress.

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Centre for British Progress @britishprogress.org · 03/04/2025

💫 We’re launching the Centre for British Progress Our founding essay: Rediscovering British Progress is a case for growth that drives shared progress, rooted in Britain's values and industrial heritage. It all starts with a postcard from 1870 👇 britishprogress.org/articles/red...

Cover of the essay Rediscovering British Progress available at https://britishprogress.org/articles/rediscovering-british-progress

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The OBR’s role in ensuring fiscal accountability is too important to risk in disputes over its political nature - 2022 proved that. But it needs tools to help it respond to the needs of governments who want to focus on long-term growth. Full piece here: ukdayone.org/briefings/ho...

How Can We Strengthen the OBR’s Forecasting? - UK Day One

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When HMG policy is shaped by OBR forecasts, and Govt is pushing on reforms that the OBR toolkit wasn’t built for (like reg. reform), it creates a pressure to reshape the OBR's role and question whether it has become a political institution.

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The result is a difficult feedback loop that my new piece with macroeconomist Rohan Shah for @ukdayone.bsky.social examines: ukdayone.org/briefings/ho...

How Can We Strengthen the OBR’s Forecasting? - UK Day One

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This elevates the role of OBR "judgement" for key forecast inputs (eg, productivity trends). Some judgement is unavoidable, but relying on judgement calls for binding forecasts invites intense scrutiny and questions about the basis for those constraints. bsky.app/profile/gemm...

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The approach underlying all OBR forecasting is now very far from the state of the art in macroeconomics. Empirical evidence produced at the research frontier becomes less useful for forecasts - forcing the OBR to rely more on other sources, like Government produced figures.

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This pressure is only going to intensify as governments have to make increasingly difficult choices on spending and taxation while trying to deliver structural reforms. These affect long-term productivity growth, which the OBR’s toolkit is not designed to forecast.

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OBR forecasts are increasingly contentious; not only do they reflect Government policy, they increasingly shape it. The 2022 mini-budget fallout is the starkest example of the OBR’s impact. A 🧵on the pressure this puts on the OBR to get things right 👇

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To ensure new towns will be effective in realising their potential, we must learn from the mistakes made in the past. Read the full report (ukdayone.org/briefings/ne...) for more details and our action plan.

New Towns for a New Generation - UK Day One

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The locations we identified in the report offer good rail links, strong local economies, and underused land. For example, Taplow would allow for more than 20,000 homes being built in an area that would connect people to high-paying jobs.

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We propose extensions of already successful areas, like Taplow on the Elizabeth Line or in smaller cities like York. To achieve this, we could deploy value capture mechanisms to ensure local infrastructure could be improved by the associated value uplift.

Shortages of housing in these locations harm workers and businesses by making good jobs less economically rewarding. New towns should therefore improve labour mobility by reducing commute times and improving the affordability of areas within commuting distance of these jobs.

Historically, many towns and cities expanded through extensions of their boundaries, like Edinburgh New Town. This should be a key learning point: new towns should be linked to areas with pre-existing economic opportunity.

Source: https://simple.m.wikipedia.org/wiki/File:Edinburgh_map.png

Traditional “garden cities” haven't fully delivered on their promise. They overlook a key force of spatial economics: agglomeration, the clustering of people and business that creates new opportunities.

In a new report for UKDayOne (ukdayone.org/briefings/ne...), @KaneEmerson and I set out where Britain’s new towns should be. To maximise growth, new towns should be built in locations near high-wage jobs, rather than isolated locations as in the past.

New Towns for a New Generation - UK Day One

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David Lawrence @davidlawrenceuk.bsky.social · 09/01/2025

🧵The next generation of new towns will transform the UK, but we mustn’t repeat the mistakes of the past.

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We're hiring! @ukdayone.bsky.social is looking for an exceptional leader to become our Head of Operations. It's a great time to join the team - we are building the next stage of the organisation and looking to the future. Full details here: ukdayone.org/headofopps

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Saloni @scientificdiscovery.dev · 09/12/2024

New post: My substack is back, finally! I meant to keep this to 1,000 words but I failed. In any case, here's a round up of 5 major medical breakthroughs in 2024.

scientificdiscovery.dev

Five medical breakthroughs in 2024

It's December, and time for a retrospective on some breakthroughs in medical innovation this year.

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pedroserodio.com @pedroserodio.com · 20/11/2024

And deny you the enjoyment of getting angry with them all over again?