Meals are deliveredd to school children living in a block of flats in Twickenham, south west London. The Resolution Foundation said the poorest fifth of households in Britain were more than 20% poorer than their French and German equivalents. Photograph: Hollie Adams/AFP/Getty Images Economic growth (GDP) Average UK household £8,800 a year worse off than those in France or Germany Thinktank blames inequality and poor productivity as CBI calls for investment policies to fuel growth

The UK’s failure to get serious about inequality and weak growth over the past 15 years has left the average British household £8,800 poorer than its equivalent in five comparable countries, research has found.

A “toxic combination” of poor productivity and a failure to narrow the divide between rich and poor had resulted in a widening prosperity gap with France, Germany, Australia, Canada and the Netherlands, the report from the Resolution Foundation said.

The thinktank said that if the UK matched the average income and inequality levels of those countries, typical household incomes in Britain would be a third higher and those of the poorest households two-fifths greater.

Its chief executive, Torsten Bell, said: “Britain is a rich country, with huge economic and cultural strengths. But those strengths are not being built on with the recent record of low growth leaving Britain trailing behind its peers.

“We must turn this around, but we are not on track to do so. We underestimate the scale of our relative decline and are far from serious about the nature of our economy or the scale of change required to make a difference. This has to change.”

In an open letter to ministers, the CBI director general, Tony Danker, took a sideswipe at the tax-cut bidding war being conducted by the Tory party contenders to replace Boris Johnson, urging the candidates to show how growth policy was “about more than this”.

The overriding objective of tax policy currently should be to boost business investment, the business lobby group added. “Growth that relies on only government or household consumption is doomed to fail, especially at a time of rising inflation and high debt.”

“There are prizes on offer through decarbonisation, innovation, trade, thriving regions, labour and health. And those prizes can be realised if government pulls on four key growth levers: smart taxation to unlock investment; building a workforce for the future; delivering catalytic public investment; and making markets to outcompete the world.”

Meanwhile, the cross-party Treasury committee expressed concern at the “chop and change” in the government’s economic approach, warning of a risk of fragmentation and a lack of long-term thinking after the abolition of its industrial strategy and replacement with the plan for growth. It was not clear how the plan for growth was an improvement on its predecessor, the report said.

Mel Stride, the committee’s chair, said: “We have a new chancellor and shortly will have a new prime minister. Getting a grip on productivity will be key to kickstarting economic growth and stimulating greater business investment in the UK. The evidence that we received suggests there needs to be greater stability and long-term certainty in government policymaking.”

The Resolution Foundation said the UK had closed the productivity gap with France and Germany in the 1990s and the first half of the 2000s, but since then the gap had widened from 6% to 16% – the equivalent of £3,700 per person.

While the top 10% of households in Britain were richer than those in many other European countries, middle-income British households were 9% poorer than their counterparts in France, while the poorest fifth of households in Britain were more than 20% poorer than their French and German equivalents.

Source: The Guardian

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