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Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newsletter.

The writer is the author of ‘Growth: A Reckoning’ and an economist at Oxford university and King’s College London.

The British economy is in trouble. Growth is non-existent. Productivity, already below the US, Germany, and France, is falling. Real wages have barely moved for 16 years, their worst run since the Napoleonic Wars. And investors are starting to shake, pushing borrowing costs up to a 16-year high.

How did Britain get into this mess – and how did it get out? It is difficult to think of a more important question for the nation. Yet the new Labor government still hasn’t provided a convincing answer. Instead, their focus is on some economic messages that have created unhelpful traps for themselves and actively undermined growth.

In the opposition, the message is “no tax on those who work”. Perhaps this is politically useful, a defense against warnings that they will raid voters’ pay packets. But its presentation failed, depriving Labor of weeks of esoteric arguments about the true meaning of the word “working”. What’s worse, the fulfillment of the promise of power holds the eCONOMY come back

This is not a good time to put most of a massive £40bn tax increase – the biggest since 1993 – on business. small companies is in reduced. The number of new start-ups has decreased for five years. Unemployment is tough. And after the impending rise in national insurance – surveys suggest higher prices and lower wages to come – it looks, in fact, like a tax on workers.

At the office, a different message was taken: Britain is facing a “black hole” in public finances. It would have been fiscally irresponsible, requiring new borrowing rules and transparency measures. But instead, Labor presented it as fiscal overspending, repeatedly emphasizing the size of the deficit (“£22bn”), relegating themselves to unconvincing argumentative gymnastics to avoid a clear solution to their own framing – more savings.

And again, none of this helped growth. Every week, we are told about the dire state of Britain, what “tough decisions” and “difficult choices” lie ahead. All this unrelenting pessimism crushes the stirring animal spirits of the country.

“The government,” said former Bank of England chief economist and FT contributing editor, Andy Haldane, “created fear and uncertainty, uncertainty . . . which is bad because after the election there is a sense of refreshment, a sense of renewal.

The closest the government has come to knowing what has gone wrong is their latest message: we need to “fix the foundations”. It is true that Britain failed to do the basics. We have a backlog of several million houses that need to be built. The application process for crossing the Lower Thames — a tunnel under the river — costs more than double the cost of building the world’s longest road tunnel in Norway. We haven’t built a nuclear power plant in three decades and our next one – Hinkley Point C – is six times more expensive than South Korea’s.

In the pursuit of prosperity, however, it is not enough to fix the foundations alone. Britain must also build the future.

What little we know about growth is that it comes not only from the old investment in roads and houses, but from new ideas, innovation and technological progress. This points to a deeper diagnosis of what has gone wrong in Britain: not only are the old investments stagnant, but these other areas of economic growth are also weakening.

Businesses struggle to innovate, filing fewer patents than rivals in Europe and elsewhere, with private R&D now FALL as a percentage of GDP. British universities have not helped, doing a fantastic job of producing academic research (57 percent more publications per capita than in the US) but often poor at putting ideas to productive use.

The City of London, a traditional source of British vitality, looks tired. While the total value of companies on the London Stock Exchange has fallen since 2007, the value of American stocks has tripled. In addition, British manufacturing industries are dated. The five largest companies in the UK by market capitalization are mostly from old-school sectors: oil, mining, finance, chemicals. In the USApple, Nvidia, Microsoft, Amazon, Alphabet dominate.

And we know that the technology sector is very important for growth. In the US, it is almost entirely responsible for the country’s spectacular productivity performance – three times the course of the Eurozone and UK since 2008-09. So this week’s AI “action plan” is encouraging: AI is the most important technology of the 21st century and the UK has the most valuable AI sector in Europe. It must now build on it, deploying the political leadership and financial resources needed to make the 50 recommendations of that plan a reality.

Three hundred years ago, Britain thundered ahead of its rivals because a new spirit took hold – risk-taking, entrepreneurial, aggressive in discovering new ideas about the world, a think of using it in practical use. That is the spirit we need to nurture again.