27/06/2013 06:55 BST | Updated 26/08/2013 06:12 BST

An Economy Out of Intensive Care - But Where Next?


So George Osborne tells us that the economy is out of intensive care - that in the last year private sector jobs have replaced five-to-one jobs that have been stripped out of the public sector; that the structural deficit is gradually being brought under control; that Britain can be the place in the world where the future is once again invented. The question is: where next?

Even though the UK is now in a more stable economic condition than it was, our situation is still critical. We mustn't forget the very real hardship that many millions of people, especially our young people, are enduring - especially given the worst job market for generations.

That's why I'm grateful that George Osborne has stuck to his guns on protecting science, and indeed, is providing a real increase in capital spending for science now and maintaining that until the end of the decade. In the context of a squeeze on spending, it is an excellent outcome - but let's not forget that outside of increases in capital funding, this flat cash settlement is a cut in real terms, at a time when other countries are investing heavily in science and innovation.

Nonetheless, Osborne has done what he can and that will have a big impact on the research universities can do to make all of our lives better in the long run. With Britain's economic recovery in mind, though, I am more excited about the potential that has for leveraging further investment from the private sector into the best of innovation our universities have to offer.

Such investment will drive growth and create jobs. Universities have a dual role in ensuring our future workforce is equipped with the skills they need to flourish in a 21st century economy, and ensuring the money pledged for their use is well used to spin-out the most promising research from the lab to the marketplace - cementing Britain's world-leading role in innovation in the process.

So in the short term we are still going to see a lot of pain not only for the public sector, but the public more widely as well. Long term, though, the Government gets it - we need a firm basis for the UK's economy in the 21st century; more than just spinning wealth out of thin air like the City has in the boom years. We need a solid base for our country's prosperity, and our research base provides that - it is, and must continue to be, the UK's engine for growth.

However, we could have seen more action to help business - I'd have like to see bolder action on cutting corporation tax to attract overseas investment, for example, and a commitment by the Government to move beyond capital spending and look at investing in the people who will staff our labs and innovate our way to prosperity in the future - our young people.

Still, this is a solid start for creating the kind of economy we want the UK to be in the 21st century. The devil now will be in the detail and delivery.