The Labour government is facing mounting pressure to accelerate its economic strategy, as a leading think tank warns the UK is "languishing" 15 per cent behind nations like Germany, France, and Canada in terms of GDP per head.
Think Tank Warns of Stagnation and Indecisiveness
A new report from the Resolution Foundation, published on Monday 19 January 2026, delivers a sharp critique of the UK's economic trajectory. The analysis highlights a prolonged stagnation in living standards across the country and criticises the government's policy approach.
The report states that policy uncertainty under the current parliament has been greater than under any of the previous seven Conservative governments. Key areas of failure identified include a lack of decisive action on planning reform and a timid approach to trade policy.
Calls for Bold Action Ahead of Davos
With Chancellor Rachel Reeves set to attend the World Economic Forum in Davos, Switzerland, this week, economists are urging her to use the platform to attract vital investment. Reeves is scheduled to meet top banking figures, including JP Morgan's Jamie Dimon, and other senior finance ministers like US Treasury Secretary Scott Bessent.
Greg Thwaites, Research Director at the Resolution Foundation, said the government had spent much of its first 18 months undermining its own strategy with "policy U-turns, kite-flying tax ideas and timidity". He argued it was time for the UK to catch up with other major economies after being overtaken by Italy.
Key Recommendations for Growth
The report outlines several critical areas for immediate government action to ramp up growth plans:
- Unblock housebuilding in major cities to address the housing crisis.
- Focus job support programmes on both younger and older workers.
- Make a decisive choice on whether to reverse some of the economic damage caused by Brexit.
- End hesitation on capital expenditure, particularly in transport and R&D, where spending as a share of GDP is not forecast to rise until 2030.
The Resolution Foundation has previously advocated for controversial policies, including in a late 2023 report led by now-Pensions Minister Torsten Bell, which called for higher taxes on wealth and other income to fund public spending.
As the Chancellor prepares for crucial international meetings, the message from left-leaning economists is clear: the UK risks falling further behind its peers without a more assertive and coherent plan for economic growth.
