London (DNA) - The next UK government must respond to an "urgent need" for wholesale reform that boosts the capacity of the state to address "interlocking crises", a study has found.

Researchers said the austerity measures after 2010 and the vote to leave the European Union have left "long-term scars" on the UK economy, leading to an "economic drift" away from other wealthy countries.

Growing regional inequalities and stagnating productivity highlight this trend, with structural changes needed to prevent a further decline in living standards, they added.

Researchers at the University of California Los Angeles (UCLA) and the Hertie School, a university in Berlin, Germany, used the Berggruen Governance Index (BGI) to assess the interaction between democratic accountability, state capacity and living standards in the United Kingdom.

While the UK's overall performance has been assessed as among the highest globally, researchers identified "signs of stagnation and erosion", particularly with regards to state capacity.

The report said: "Since the latter is a major mediating factor in democracy’s ability to produce public goods, there is an urgent need for structural change if the country is not to succumb to even more severe problems impacting its future quality of life."

However, the report added that a reform effort must consider the "pressing need" for public investment with rising UK public debt.

Researchers recommend that to avoid further decline, the reasons behind eroding state capacity "should be closely examined and monitored", including how the civil service manages to attract and retain talent.

The report added: Beyond state capacity, the major reform needs are clear: the UK finally must take regional planning seriously and move it beyond mere rhetoric to tangible economic policy."

"Reviewing what went right and (mostly) wrong in regional policy is a place to start for any new government. The rise in regional inequality has been decades in the making and any potential solutions must operate with an equally lengthy time horizon."

Researchers said investment is needed to improve "critical public institutions" such as the National Health Service (NHS), the education system, housing, social services and transport infrastructure.

But structural reforms are also necessary due to "considerable inertia of dysfunctional practices and policies", they added.

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