Area of investment and support

Area of investment and support: Economy

The Economic and Social Research Council supports the creation of new insights from research and data sets that help people, organisations and policymakers understand the economy and improve day-to-day life in the UK and around the world.

Partners involved:
ESRC

The scope and what we're doing

Research on the economy seeks to understand how people interact to produce and exchange goods and services and the collective impact of those interactions. This includes everything, from why new innovations and technologies develop in some places and not others, to what trade-offs are needed to address environmental issues.

The most pressing issues we face – from health inequalities to climate change – have some economic dimension, and new insights are important in developing solutions to these problems. We work closely with government, business and industry to improve our understanding of the economy to benefit the UK. We fund research and innovation that helps people, organisations and policymakers to make sense of the economy and help their decision-making, including on:

  • how wages and salaries are set
  • what tax levels mean for investment
  • how the economies of other countries affect us
  • how to improve productivity
  • how to support businesses and sectors to adapt to new opportunities.

Below are a few examples of our work.

Productivity

Productivity determines a society’s standard of living. The UK’s productivity has stagnated since 2007, which limits how much our economy can grow. One of our key investments is the £32 million Productivity Institute, headquartered at the Alliance Manchester Business School at the University of Manchester.

This institute provides the knowledge needed by governments and business leaders to increase productivity in the UK. It investigates how productivity can be improved in rural areas, towns and cities, and how we factor in concerns about the environment and mental health. This is especially important during the era of climate change and in the aftermath of the COVID-19 pandemic.

Trade is another important dimension of UK productivity. Our new Centre for Inclusive Trade Policy (CITP), led by the University of Sussex and the University of Nottingham, will support the development of the UK’s future trade policy by exploring issues such as the configuration of free trade agreements and imported food regulations.

We want to transform how we approach productivity in the UK. We are funding research that investigates how different management and wellbeing practices impact productivity in small businesses, how future technologies could help and how our infrastructure affects our workforce’s output. Our Programme on Innovation and Diffusion (POID) is carrying out cutting-edge research into how to boost productivity through nurturing innovation and how to spread these new ideas across the economy.

Find out more about our investments in productivity.

Rebuilding macroeconomics

The 2008 financial crisis wasn’t predicted by economists or traditional economic models. It was clear we needed a rethink on how we study macroeconomics, the branch of economics that deals with how the wider economy behaves (the ‘bigger picture’).

Macroeconomics involves national and global economic issues such as economic growth, inflation, employment and financial stability. Our Rebuilding Macroeconomics network led by Dr Angus Armstrong, is finding innovative, fresh ways to study the field.

The six hubs in the network are exploring how globalisation, institutions, instability, social cooperation, sustainability and our financial systems all interplay, how they affect the macroeconomy and what this means for the UK and other countries.

The network is taking macroeconomic questions into the real world so that we can guard against future crises that have a devastating toll on people’s livelihoods and countries’ economies.

Creating a better society

Understanding the economy is central to creating a better, fairer society. For over 30 years we have funded the Centre for Economic Performance (CEP) to investigate how economic performance can be improved, and how the gains of growth can be shared fairly and sustainably.

Its research covers a huge range of topics including:

  • how governments could organise society for maximum happiness
  • what the living wage should be
  • why some urban areas thrive and others suffer
  • which school system would work best for the UK.

We have funded the Centre for the Microeconomic Analysis of Public Policy (CPP) based at the Institute for Fiscal Studies (IFS) since 1991. CPP exists to advance our understanding of how people and businesses behave and react to policy. It provides rigorous, impartial evidence that is used to shape policies on taxation, education, public finances and more.

Helping people understand and use economics

It is vital we all have access to current insights and evidence on the state of the economy. Many of our economists contribute to public debates. Our Centre for the Microeconomic Analysis of Public Policy contributes to the production of Microeconomic Insights, which informs people about microeconomic issues, ranging from which policies can reduce pollution to how household tasks are divided between family members.

We believe it is important for everyone to understand how the economy and crises affect them. Our Economics Observatory brings academic, policy and business expertise together to ensure the government, businesses and the public is informed and equipped to respond to economic changes. It provides balanced, reliable answers to questions about the pandemic’s effect on the economy and how it will affect the future.

Anyone can submit a question to the observatory’s economic experts. They have provided answers to questions such as:

  • are we moving towards a cashless economy?
  • is my pension safe?
  • what happens once furlough ends?

Understanding how people earn, save and spend money is essential to understanding the economy. It helps policymakers and businesses predict trends, avoid stagnation and operate more effectively. Our Consumer Data Research Centre uses the vast amount of consumer data produced in the UK to help businesses and society. Businesses benefit from the research but so does society as a whole. The data can be used to help planners decide whether a city needs more bicycle lanes, what type of housing a town needs and how to tackle public health issues like obesity.

Local and regional economies

Local and regional economies shape the UK’s overall economic performance. They also shape how people experience life across the country. For example, the jobs, wages and services available to someone living in Shetland are different to those in Sunderland or Swansea. Our research and data collections provide critical insight into every corner of the UK.

The What Works Centre for Local Economic Growth provides data that can be used for local economic policy and industrial strategies. It provides evidence to policymakers where you live, giving them guidance on how to help the high street, give businesses access to finance and get young people into work.

Our Enterprise Research Centre delivers independent research and insights that help small and medium enterprises thrive. It conducts studies and research across the UK, offering insights into a breadth of areas such as the mental health of employees in the Midlands to determining the impact of the COVID-19 pandemic on businesses in Northern Ireland.

We also part-fund the Decision Maker Panel (DMP), which surveys thousands of businesses each month about the uncertainties they face. DMP is an invaluable tool. From February 2020 it has included COVID-19 questions, which provided the Bank of England and the UK Government with invaluable insight and real-time data from businesses of all sizes.

How digital technology will change work

Digital technology has already transformed how we work. Office workers use emails instead of faxes, deliveries can be tracked using apps, and hairdressers can use social media apps instead of magazines to track trends.

This transformation will only continue. We have funded the Digital Futures at Work Research Centre (Digit) to compile the evidence base we need to understand how digital technologies will reshape the workplace, working life and the economy. Digit is generating new knowledge about the benefits, opportunities, risks and challenges of these changes.

The COVID-19 pandemic had a galvanising effect on how businesses use digital technologies and created a huge shift in how people work. Our Next Generation Services projects, funded with Innovate UK, have been supporting the legal, insurance and accountancy sectors to adopt and respond to new innovations, products and services.

Our Made Smarter Innovation investment Interact, with Innovate UK and EPSRC, is supporting UK manufacturing to become more productive and competitive through the innovation and diffusion of digital technology.

And our Discribe Hub is a ground-breaking social science-led digital security research programme, part of the UK Government’s wider Digital Security by Design (DSbD) Programme focused on driving the development of DSbD technology to keep us all safer.

Why we're doing it

Understanding how goods and services are produced and consumed, and the flow of money around these processes can help us improve day-to-day life in the UK and around the world.

We work closely with government, business and industry to improve our understanding of the economy to benefit the UK. We fund research and innovation that helps people, organisations and policymakers make sense of the economy and help impact on their decisions.

Opportunities, support and resources available

Who to contact

This is the integrated website of the seven research councils, Research England and Innovate UK.
Let us know if you have feedback or would like to help us test new developments.