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The New British Economy

Author

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  • Richard Kneller

    (University of Nottingham)

  • Garry Young

    (Bank of England)

Abstract

The British economy has performed well since the recession of the early 1990s. How much of this is due to the revolution in information and communications technology (ICT)? We find that the stock of computing equipment has grown at a similar rate to that seen in the US, but there appears to have been no similar ICT-induced pick-up in productivity growth. We suggest that any underlying improvement in productivity growth has been obscured by a slowdown in manufacturing and by the need for the unemployed to be absorbed into employment. We find no evidence yet of any clear effect of ICT on pricing and suggest that any benefit of greater competition is likely to come about by encouraging productivity growth rather than by reducing margins. We argue that the main cause of Britain’s improved performance lies in the labour market. Looking forward, we are optimistic that the benefits of ICT will become more apparent as the factors that have obscured it become less important.

Suggested Citation

  • Richard Kneller & Garry Young, 2001. "The New British Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 177(1), pages 70-84, July.
    • Handle: RePEc:sae:niesru:v:177:y:2001:i:1:p:70-84
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    Cited by:

    1. Jonathan Temple, 2002. "The Assessment: The New Economy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 241-264.
    2. Nicholas Oulton, 2002. "ICT and Productivity Growth in the United Kingdom," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 363-379.
    3. Bakhshi, Hasan & Larsen, Jens, 2005. "ICT-specific technological progress in the United Kingdom," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 648-669, December.
    4. Hasan Bakhshi & Jens Larsen, 2001. "Investment-specific technological progress in the United Kingdom," BIS Papers chapters, in: Bank for International Settlements (ed.), Empirical studies of structural changes and inflation, volume 3, pages 49-80, Bank for International Settlements.
    5. John Van Reenen, 2001. "The new economy: reality and policy," Fiscal Studies, Institute for Fiscal Studies, vol. 22(3), pages 307-336, September.

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