The United Kingdom and the Means to Prosperity

Case Solution

Laura Alfaro, Lakshmi Iyer, Hilary White
Harvard Business School ()

After battling the country’s longest recession since 2008, the UK will grow faster than any other G7 nation in 2014. Analysts wondered whether the return to growth was due to or despite the prime minister’s controversial austerity plan. £ 113bn David Cameron introduced in 2010. Despite the positive economic rebound, British politicians still faced the challenges of rapidly rising income inequality, an economy dominated by the financial sector, a potential housing bubble and a upcoming referendum on Scottish independence. Furthermore, many claimed that the UK was threatened by secular stagnation, a slowdown in economic growth due to a structural demand deficit. What could the government do to put the country on a sustainable and balanced growth path?

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