The UK has lost the labour market flexibility that once drove economic growth and must rethink policies on tax, immigration and workers' rights to restore dynamism, according to the Tony Blair Institute. The think-tank argues that the Labour government's recent policies have made the UK economy less agile at a time when adapting to artificial intelligence is crucial.

Among its proposals, the TBI calls for making it easier to dismiss high earners, restricting non-compete clauses, and making minimum wage increases contingent on economic conditions. The institute also advocates for new visa routes for low-paid construction and care workers, and restoring the Low Pay Commission's authority to adjust wage increases based on employment impacts.

The institute's recommendations contrast sharply with left-wing Labour MPs who want increased social protection as unemployment rises. The proposals align with concerns from business groups and Bank of England economists that post-Brexit restrictions and government policies are driving up labour costs and hampering growth.