Professors Steven Broadberry and Nicholas Crafts have had a sustained impact on UK economic policy, using insights from economic history to inform the pro-growth policies of the 1990s New Labour government and responses to the 2008 financial crisis.
What has the research shown?
In a series of articles spanning 20 years, Broadberry and Crafts analysed post-war British productivity performance, benchmarking it against other modern economies. They found that British productivity growth was lower than it could have been between 1950 and 1973 by about one per cent, causing Britain to fall behind other European countries in manufacturing and services. This performance was driven particularly by poor British labour relations and low competition in British product markets.
Drawing on lessons from the past, the research was noted for its early advocacy of policies designed to increase productivity, known as supply-side policies, which are now common in pro-growth economic reforms. This included policies to stimulate investment, enhance workforce skills by investing in education, promote innovation, increase competition and reform corporate law and regulation.
What has happened as a result?
The research has been instrumental in shaping UK government thinking throughout recent decades, increasing understanding of pro-growth supply-side policies.
In the late 1990s, Crafts regularly met with and presented to policymakers, highlighting pro-growth policies. His influence was reflected in the ‘Five Drivers of Productivity Performance’ (investment, skills and human capital, innovation, competition and enterprise), included in the Labour Government’s policy statements from 1999 onwards. He was also particularly influential in the development of the 1998 Competition Act.
Subsequently, the 2008 financial crisis and slow recovery of the British economy revived interest in pro-growth economic policies. The research informed the Coalition Government’s thinking on supply-side issues and contributed to internal debate and policy development. Notably, it had a significant impact on the ‘Plan for Growth’ published alongside the 2011 Budget, which outlined a programme of structural reforms to boost the economy. Three of the Plan’s four ‘pillars’ - lowering regulatory and legal barriers to starting and growing a business, encouraging investment, and creating a more educated workforce – are repeated throughout Broadberry and Crafts’ research.
The research has also informed government thinking in areas including the importance of infrastructure spending, the role of the housing market and housing policies in economic recovery, and industrial policy.
References to the research
1. Crafts, N., 1996, 'Post-Neoclassical Endogenous Growth Theory': What are its Policy Implications?, Oxford Review of Economic Policy, v12n2, pp 30-47.
2. Bean, C. and N. Crafts, 1996, British Economic Growth Since 1945: Relative Economic Decline … and Renaissance?, Chapter 6 in N. Crafts and G. Toniolo (eds.), Economic Growth in Europe since 1945, Cambridge University Press, pp 131-172.
3. Broadberry, S. and N. Crafts, 1996, British Economic Policy and Industrial Performance in the Early Postwar Period, Business History, v38, pp 65-91.
4. Broadberry, S. and N. Crafts, 2003, UK Productivity Performance from 1950 to 1979: a Restatement of the Broadberry-Crafts View, Economic History Review, v56, pp 718-735.
5. Crafts, N., 2012, British relative economic decline revisited: The role of competition, Explorations in Economic History, v49, pp 17-29.
6. Crafts, N., 2013, Returning to Growth: Lessons from History, Fiscal Studies, v34, pp255-282, edited version of Crafts’s Royal Economic Society Policy Lecture of 17th October, 2012.