Britain has a severe problem with its sluggish rate of growth. And while Labour wishes to tackle it, it is going about it the wrong way. The trend rate of economic growth has been successively revised down to just over 1%, which is less than half of our postwar norm. Twice-yearly incremental changes to tax and spending policy – such as the spring statement this Wednesday – will not meet the challenges of stimulating a sustained increase in the growth rate, which requires a significant nurturing of our intellectual and physical capital.

The Bank of England and the government set monetary and fiscal policies respectively, and therefore GDP growth. These institutions, or rather successive bosses of the Treasury, chancellors, must then take much of the direct blame for our stagnation. Policy fails because it is not subject to sufficient timely independent scrutiny. While we are now beginning to understand the errors in policymaking since 2010, a commitment to examine economic performance earlier would help the UK move away from poor policy practice.

Let me start with monetary policy. For most of the time since the financial crisis, the Bank of England’s interest rate policy has been ultra-loose. Low interest rates and the bond purchases programme (so-called quantitative easing, or QE) has stimulated a huge escalation in asset prices. And this has skewed wealth distribution towards those with assets, rather than those who live from income alone. Low interest rates have also allowed highly indebted firms, so-called zombie firms, to continue trading – but they do not typically invest in their workers or firm-specific capital. Both of these channels act to lower economic growth.

In June 2023, the court of the Bank of England commissioned the former chair of the US central bank and Nobel prize winner, Ben Bernanke, to write a report on the Bank of England’s forecasting processes. Following the publication of the report last April, we now also know that the Bank’s model and model team need fundamental reform as they failed in 2021-22 to understand the buildup in inflationary pressure. There is also the ongoing problem of the clarity and effectiveness of monetary policy committee (MPC) communication, which has meant that there has been excessive volatility in other interest rates as markets have often felt misled as to the Bank’s view. Monetary policy has simply been in the wrong space – too loose and opaque to understand.

Simultaneously, government tax and spend policy has failed. Debt to GDP has practically doubled since the Office for Budget Responsibility (OBR) was established in 2010 and the net worth of the public sector has also been in long-term and persistent decline. The basic problem with the fiscal framework is that it disincentivises public investment and research and development (R&D) as it encouraged successive chancellors to trim public investment in order to meet the fiscal rule for debt.

Unfortunately, it is precisely these areas of government expenditure that have been systematically shown to stimulate growth in many academic studies. Successive chancellors have basically offered policies that favour existing structures and interests with minimal oversight, where what we need, for example, is regulatory reform of public-good providers and a consolidation in civil service numbers.

As a result of these failures and in the interests of transparency, I would support an inquiry into QE, which seems likely to lose us roughly £100bn – and dwarfs the current concern in meeting the arbitrary fiscal rules. This is because the Bank is now selling the bonds it bought at a lower price than their purchase. It is also time to review the fiscal framework that has a fundamental flaw in its design: the use of the instrument of policy (debt to GDP) as the objective of policy. If we really want to bring about a better standard of living with fiscal policy, we cannot at the same time adopt arbitrary restrictions on its use.

The Labour government has declared its aim to bring about a persistent increase in growth, but also to have only one fiscal event a year. But growth has stalled since July’s general election and the March statement is increasingly sounding like a second budget. We need to have a different type of spring statement: one that focuses on our plans and progress towards higher growth and a better standard of living. We do not need yet more incremental changes to tax and spending.

The chancellor should commit to an annual spring statement that provides a thorough outline of the economy, which includes an analysis of growth prospects and policies being considered. Also, because economic growth is slow to change and uncertain, we need real-time markers, which are consistent with higher growth, so we can monitor progress.

Late last year, the Treasury finally published an area of research interests (ARI) document: other departments had done so for years. The ARI sets out the economic issues on which the Treasury is hoping to encourage academic thinking and research. As such, the ARI provides a rather good scheme for the structure of the statement and may encourage the Treasury to commission or invite submissions. The report could easily be turned around by a new unit in Whitehall and ought to be reviewed by the under-resourced Economic Advisory Council, which at last count only had two, albeit excellent, academic members.

The final document would be published on the day of the statement and form the intellectual basis for the chancellor’s speech, as well as encouraging a more authoritative debate on policies for growth. But most importantly, it would force the Treasury and the chancellor to take more direct ownership and responsibility for economic growth and living standards.

Such an event would set the agenda for the autumn budget and have the considerable benefit of encouraging longer-term thinking on public policy. The advantage of an annual commitment to such a statement means that we will hear about progress since the previous year and so track success or failure.

The clock is already ticking on a government pursuing growth; according to the latest numbers, the economy has stalled once again. We need to adopt a fundamentally different approach to our growth problem: open the windows at the Treasury and let in light and air.

• Jagjit Chadha is professor of economics at Cambridge University. He was director of the National Institute of Economic and Social Research (NIESR) from 2016-2024 and is a former academic adviser to HM Treasury, the Bank of England and the Treasury select committee