Economists challenge UK's reliance on growth to improve lives

What happened

Economists Karel Williams and Sukhdev Johal have challenged the place of economic growth at the centre of UK politics, arguing that relying on an expanding economy is not a dependable route to better lives.

Speaking with Aditya Chakrabortty on Radical Thinking, they examined what towns and suburbs might look like if stronger growth did not arrive. Their discussion considered how communities could improve living conditions rather than treating a revival in national economic performance as the essential starting point.

The argument concerns growth per person, not simply the size of the economy. That distinction matters because an increase in total output can accompany a rising population without leaving more output, on average, for each resident.

Williams and Johal are members of the Foundational Economy Collective. Their work includes analysis of the cost of living and, more recently, the water system in England and Wales: subjects that connect economic policy to household bills and essential services.

Their intervention brings together two questions that are often treated separately: whether governments can generate faster growth, and whether growth, when it occurs, necessarily delivers the improvements people need.

The background

Successive UK governments have pursued markedly different economic approaches, ranging from tighter public spending to greater expenditure. Deregulation, Brexit and the effort to reduce geographical inequalities through levelling up have also featured in attempts to strengthen economic performance.

These approaches act through different channels. Public spending can support demand and provide infrastructure or services. Spending restraint reduces expenditure against the alternative path, while changes to regulation alter the requirements under which businesses operate. None is itself a measure of household wellbeing.

Brexit changed the UK's relationship with the European Union. Levelling up, by contrast, focused on differences between places within the country. Their inclusion in the growth debate illustrates how both international arrangements and domestic regional policy have been presented as routes to economic improvement.

The geographical dimension is central to the discussion with Williams and Johal. A national average combines places with very different employment opportunities, housing costs and access to services. It does not describe the experience of every town, suburb or household.

Chakrabortty previously examined conditions in Pontypool, in South Wales, in 2016. That work forms part of his longstanding interest in the economists' approach and in the circumstances of communities shaped by industrial change.

The foundational economy approach focuses attention on the everyday systems people depend on. Water is a clear example: households need a functioning supply regardless of whether the wider economy is growing quickly, slowly or not at all.

What growth figures measure

Gross domestic product, or GDP, measures economic production within a country. When economists discuss real growth, they mean changes in output after adjusting for price increases, rather than an increase that merely reflects goods and services becoming more expensive.

GDP per head divides that output by the population. It is useful for distinguishing a larger economy from greater production per resident, but it remains an average. It is not the amount paid into an individual's bank account.

Household disposable income measures something different: the resources available after taxes and benefits. Earnings, pensions and other income feed into household finances in ways that a headline production figure cannot show on its own.

Distribution also matters. An average can rise even when the gains are concentrated among a relatively small group. The median, which identifies the middle of a distribution, can therefore tell a different story from the mean.

For household budgets, the composition of spending is important too. Families devote different proportions of their income to essentials, so the same change in water, energy or food costs can have unequal effects on the money left for other purposes.

Public services add another dimension. Access to healthcare, education or transport affects everyday living conditions, but those benefits are not captured simply by looking at a household's cash income. Assessing wellbeing therefore involves more than choosing between national output and wages.

Productivity is distinct again: it concerns output relative to the resources used to produce it, such as hours worked. Higher productivity can support higher incomes, but decisions about pay, prices and investment influence how any gains reach households.

What people are saying

Williams and Johal's position is a critique of political dependence on growth, rather than a forecast tied to a particular economic release. They question the expectation that pursuing growth will, by itself, resolve the pressures people experience in daily life.

Chakrabortty has supported their work and that of their colleagues over many years. In the discussion, he explores both existing conditions in communities and the different arrangements that might be possible when growth is no longer treated as the overriding objective.

The economists also take their arguments beyond conventional academic publication. Through the Foundational Economy Collective, they make working papers freely accessible, allowing readers outside universities to engage with their analysis without paying for access.

That publishing model avoids some of the delays and costs associated with academic publishing. Their cost-of-living work is one example of how they use it to address an immediate public concern rather than confining the debate to specialist journals.

What happens next

A more recent strand of Williams and Johal's work concerns water in England and Wales. Their book, Murky Water: Challenging an Unsustainable System, applies their scrutiny to a specific essential service rather than treating the economy solely as a national aggregate.

Water brings long-term investment into the discussion. Maintaining networks and other infrastructure requires spending whose benefits can extend well beyond the year in which the money is committed. Current bills and the future condition of a service are therefore connected but different considerations.

For policymakers weighing the broader argument, the choice of objective affects how a proposal would be assessed. A policy aimed at affordability would be judged against household costs; one aimed at service quality would need measures of how well that service operates.

Those assessments also involve trade-offs. Reducing the amount a household pays does not automatically reduce the cost of providing a service. Funding can instead shift between customers, taxpayers and other participants, depending on the arrangements chosen.

The distinction between objectives and funding is important to any approach that puts everyday provision first. Deciding what should improve is one task; determining who pays, who delivers it and over what period is another.

Why this matters

For UK households, lower inflation does not generally mean bills return to their previous level: it means prices are rising more slowly. An improving economic indicator can therefore coexist with a budget still under pressure from earlier increases.

For communities, access matters alongside price. An affordable service offers limited practical benefit if people cannot use it when or where they need it. That is a further reason why local conditions belong in an assessment of living standards, alongside the national growth rate.