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Better education and later pension age will boost economy

Margareta Pagano
Saturday 10 July 2010 19:00 EDT
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Retraining the unemployed, improving education and training for UK workers and raising the pension age could all boost the economy's long-term growth rate, according to a study by the Centre for Policy Studies.

John Llewellyn, a former chief adviser to the OECD and the Treasury, says in the report that while the Government is right to concentrate on cutting the deficit, it should also be looking at supply-side reform if it wants long-term economic growth. He argues that too many economists are taking the pessimistic view that little can be done to increase growth in the economy as it goes through the deepest spending cuts for generations.

In his report, Conditions: for Growth: what government can do to promote long-term growth, published today, Dr Llewellyn says the Government could grow the economy by between 0.5 per cent and 0.75 per cent by raising the pension age by five years by 2020, retraining the unemployed rather than passively paying income support, limiting people from taking incapacity benefits and improving education, as British workers have some of the lowest numeracy and literacy skills in the world. He estimates his reforms would be worth between £82m and £124bn over 10 years.

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