Only in Britain could a nation that has not really grown in 20 years start debating what kind of growth it needs.

This month Daniel Susskind, a business professor, used this year’s Nobel economic committee picks of Joel Mokyr, Philippe Aghion and Peter Howitt to castigate Labour’s growth focus on infrastructure. The Nobels’ big lesson, he argued in the Financial Times, was that enduring growth stems from new ideas driving innovation, not concrete and cranes. A serious “pro-growth” government, he said, would pour money into science funding instead of housing and transport.

It’s an alluring argument, especially for ministers who love being told that prosperity lies in innovation “strategies”, glossy AI papers and photo-ops with lab-coated scientists. Yet I think it’s misguided, for the reasons my friend Sam Bowman of the Adam Smith Institute has highlighted. Yes, novel ideas and technologies determine humanity’s long-run prosperity. But there’s both a conceptual and a practical reason why Labour’s focus matters.

The conceptual reason is that Britain is not at the world’s technological frontier. By 2019, US labour productivity was about 28 per cent higher than here. Work by the economist Aadya Bahl finds that after adjusting for capital and workforce skills, the US was 11 per cent more productive. In other words, roughly 60 per cent of the differential is explained not by our technological inferiority but by Britain’s lower investment in capital, machines, infrastructure and skills.

That leaves plenty of room for “catch-up” growth. By removing structural bottlenecks — restrictive planning laws, infrastructure delays, regulation that deters investment or hiring — Britain could grow GDP by using existing technologies better, expanding markets and deploying resources more productively.

This is Adam Smith’s classic growth recipe. And China has proven it’s still powerful. Between 2000 and 2024, China’s income per head rose ninefold, mostly by importing others’ technology and methods. True, Britain does not have that room to run. Yet by better allocating workers, producing cheaper energy and letting cities grow, more building could lift growth meaningfully today and for years to come, so edging us towards American living standards.

The practical reason for disagreement is more important: there’s not really a significant trade-off between this “Smithian” growth and growth from innovation. Sure, there’s some competition for public funds. But most Smithian growth (especially through deregulation) is complementary to innovation. By removing planning barriers to physical development, you encourage specialist clustering of activity that helps foster breakthroughs. Most now admit China’s “learning by doing” is delivering cutting-edge technology in some sectors.

Britain has world-class universities, but our planning laws stop large cities growing around them to commercialise the researchers’ breakthroughs. Talented graduates cannot live in Cambridge and London because housing costs keep them away. Venture capitalists talk about the shortage of “scale-ups”, not because the British are bad at research but because firms cannot find abundant lab space.

Then there’s high taxes, “workers’ rights” and net zero laws. In a world in which ideas matter, the economist Chad Jones’s work shows that punishing top earners is self-defeating. Deter a few of their projects, or incentivise them to leave, and you take a growth hit.

Research increasingly shows that when it’s easier to hire and fire employees and less costly to restructure businesses, you get more high-risk industries where firms expand, contract and experiment at pace. Yet Labour seems keen to Europeanise and ossify our labour laws with rights. Then there’s energy: does anyone deny low costs there matter in US tech and AI leadership?

Throwing funding at university science simply is not enough for growth. In fact, the Nobel winner Mokyr’s work shows that the Industrial Revolution take-off occurred precisely when basic science found complementary commercial application under conditions where firms could profit from innovation and people desired progress.

Yes, new ideas elevate humanity. But Britain does not need to invent to grow. And it will not invent much anyway if firms cannot build and grow here.