NESTA analyses how to rebalance economy

The report, entitled ’Rebalancing Act’, provides new analysis on how to rebalance the economy. It shows that a full-blooded revival of the wider manufacturing sector is wishful thinking and would require growth rates not seen since the Second World War.

NESTA worked with Oxford Economics to develop four scenarios for the future balance of the economy and applied them to an economic forecast model showing how each would affect economic growth, regional performance and employment in the UK.

The four scenarios are ’business as usual’, in which the UK continues to rely on financial and business services with no significant rebalancing; a manufacturing renaissance, where the gap between the UK and leading European Union (EU) manufacturing nations is halved; a high-technology growth scenario, where recovery is driven by growth in high-technology sectors; and an innovation scenario, where investment in innovation across the economy increases productivity.

Jonathan Kestenbaum, NESTA’s chief executive, said: ’Our analysis puts paid to the notion that a broad-based manufacturing renaissance will drive recovery. Instead, it shows that a recovery based on high technology and innovation offers the best prospect for growth.’