The Policy Agenda

An excerpt from the Annual Review’s policy section by Andy Westwood

As productivity and growth have moved to the centre of economic policy debates, The Productivity Institute has continued to strengthen its contribution to national, regional and local policymaking.

Building on foundations established in previous years, the Institute focused on translating research evidence into practical insights to inform policy and support productivity growth.

Through its research and engagement activities, TPI explored how access to the foundations of productivity, including skills, training, innovation and investment, can be broadened, and how the gains from productivity growth can be shared more widely across people, firms and places.

During the year, TPI researchers, Policy Fellows and partners engaged with governments, mayoral authorities, policymakers and business leaders across the UK.

These engagements related to real-time policy challenges, including industrial strategy, regional growth, skills, trade, innovation and the institutional conditions needed to support long-term productivity improvement.

The Policy Unit

Since its launch in October 2024, the Policy Unit has continued to strengthen the Institute’s policy engagement and influence.

The publication of Joining Up Pro-Productivity Policies (July 2025), which brought together insights and analysis from TPI scholars and contributors, helped shape a programme of policy commentaries, briefings, research papers and public analysis throughout the following year.

Particular attention was given to the implementation of the Government’s new industrial strategy, the capacity of national and regional institutions to deliver economic change, and the role of cities and regions in driving growth and productivity improvements across the UK. The Institute held regular meetings with staff from the Industrial Strategy Advisory Council (ISAC), based in Manchester.

Supporting Better Policymaking

On fiscal policy and investment, the Institute published commentaries including Will We Get a Productive Budget? and Budget 2025: Hyperactive Incrementalism and the Missing Long View, examining the relationship between government decision-making, investment and long-term productivity performance.

Place-based growth and regional development were explored through commentaries such as Investments in Left-Behind Places Will Take Time to Boost Growth and Now Is the Right Time for a Greater Manchester Baccalaureate, highlighting the importance of skills, local institutions and sustained investment in improving economic performance.

The Institute also expanded its policy coverage of international trade through Supply Chain Lock-In and the Selective Destruction of EU-UK Trade, strengthening understanding of how changing trading relationships affect business performance and growth.

Engagement and Influence

TPI researchers maintained regular contact with UK Government departments and the devolved governments in Wales, Scotland and Northern Ireland, while engagement through the Productivity Forums strengthened relationships with mayoral authorities and regional leaders across England.

Several scholars and thought leaders associated with TPI also contributed directly to the development of government policies, institutions and reviews. These included Diane Coyle and Kate Barker’s involvement with the New Towns Taskforce and the Industrial Strategy Advisory Council, Anton Muscatelli’s work on regional economic development and innovation in Scotland, and Andy Westwood’s roles as a board member of Skills England, the Milburn Review, the Department for Science, Innovation and Technology’s College of Experts, and the National School for Government.

Through these activities, TPI helped bring productivity evidence into policy discussions while strengthening links between academic research and practical policymaking.

The Manchester Model and Place-Based Growth

A significant focus of this year’s policy work was the emergence of the Manchester Model as a lens through which to examine wider questions of UK growth, productivity and regional development.

TPI brought together a dedicated body of evidence and commentary through its Manchester Model research collection, exploring how governance, investment, trade, innovation and devolution have shaped Greater Manchester’s economic performance.

Rather than presenting Greater Manchester as a blueprint for other places, this work seeks to understand the evidence behind its recent economic performance and identify lessons that may be relevant across the UK.

Research examined topics including regional growth, foreign direct investment, international connectivity and the role of long-term institutional collaboration in supporting economic development.

One strand of this work, led by TPI’s incoming Director Jun Du, explored Manchester’s ability to attract and channel foreign direct investment into productive activities, contributing to wider debates about place-based growth, regional productivity and the future direction of UK economic policy.

International Comparisons of Pro-Productivity Policies

During the year, TPI also continued its comparative work on pro-productivity policies, which the Institute began in 2024.

The country studies include six EU nations, the United States, Canada, Japan and South Korea, alongside emerging economies including Brazil, China and India.

A synthesis of this work found that all countries have experienced periods of success and failure in combining complementary policies related to investment, innovation, market performance and internationalisation.

While important lessons can be drawn from these experiences, the evidence suggests that coordinating pro-productivity policies becomes more challenging as countries move closer to the productivity frontier.

A volume containing 17 country case studies, edited by Dirk Pilat and Bart van Ark, has been submitted for publication by Routledge in 2027.

Pilat and van Ark also oversaw a parallel project in 2025, funded by the International Labour Organization, focusing on pro-productivity policies, inclusive growth and decent work in middle-income countries, including eight case studies from Africa, Asia and Latin America.

The work has documented how middle-income countries have pursued a wide range of policies in these areas, often facing challenges around coordination and implementation. Insights papers based on this research will be made available by TPI in the second half of 2026.