Rising crime levels are costing the UK economy up to £250 billion annually, according to a new report that attributes the issue to austerity measures weakening policing and the criminal justice system.

The report, published by the centre-right think tank Policy Exchange and endorsed by former Conservative chancellor and home secretary Sajid Javid, argues that years of funding cuts to the police, prisons, and courts have led to a surge in crime that is hindering economic growth.

It highlights an “epidemic” of shoplifting, alongside other offences, as a major burden on businesses, the public sector, and individuals, estimating a direct economic cost of around £170 billion per year—roughly 6.5% of the UK’s gross domestic product (GDP).

Beyond direct financial losses, the report also considers the wider impact of crime on behavior. It suggests that fear of crime leads businesses and individuals to take precautionary measures—such as avoiding high streets or delaying investment—potentially pushing the total economic impact to as much as £250 billion, or 10% of GDP.

With the government facing pressure to allocate funding for public services and defense, Policy Exchange has urged the Labour Party to invest an additional £5 billion annually to address critical issues in prison capacity, policing, and court backlogs.

In addition to linking the crime surge to austerity, the report proposes sentencing reforms, including automatic tougher penalties for repeat offenders and the deportation of foreign criminals.

The study, also supported by former Bank of England chief economist Andy Haldane, calls for increased public spending on law enforcement and the criminal justice system as a means to support economic stability.

Official crime statistics indicate a steady rise in offences in recent years. Britain’s major retailers have voiced concerns over the growing impact of shoplifting, with Sharon White, former chair of the John Lewis Partnership, previously describing the trend as an “epidemic.”

According to police data, shoplifting incidents have risen by 51% since 2015, reaching a 20-year high. Over the same period, recorded robberies have surged by 64%, while knife crime has increased by 89%.

Javid, who served as home secretary from 2018 to 2019 before briefly becoming chancellor in early 2020, reflected on his tenure in the report’s foreword. While expressing pride in his efforts to combat crime, he acknowledged that significant challenges remain.

“History shows that economic prosperity thrives in societies that prioritize law and order,” he wrote. “When consumers and businesses trust that contracts will be upheld and that their hard work will be safeguarded from theft and violence, they have the confidence to invest, work, and build something of value. Without this confidence, we all suffer.”

Labour has been vocal about tackling crime, with leader Keir Starmer blaming years of police funding cuts and sentencing policy changes under Conservative leadership for what he termed a “Tory shoplifter’s charter.”

However, concerns persist over the tight fiscal landscape, with Chancellor Rachel Reeves’ upcoming spring spending review potentially prioritizing defense spending over public services, which could limit funding available for crime reduction efforts.

Policy Exchange suggested reallocating funds from other public spending areas, emphasizing that defense should be the top priority. However, this recommendation could pose challenges for Labour, as it conflicts with their commitment to avoiding austerity and their campaign promises to improve struggling public services.

Andy Haldane, now chief executive of the Royal Society of Arts, warned of an impending, potentially harsh public spending review that could have significant political implications.

“In a time of heightened anxiety, this report serves as a stark wake-up call for all political parties, highlighting the growing economic toll of crime and the serious societal consequences of continued neglect of one of the government’s most fundamental duties—ensuring the security of its citizens,” Haldane stated.

Crime and Policing Minister Diana Johnson outlined the government's long-term strategy, stating: “Over the next decade, we are committed to halving violence against women and girls, reducing knife crime, and rebuilding public trust in policing and the criminal justice system as part of the Safer Streets Mission.”

She further detailed the government's Plan for Change, which aims to strengthen community policing by recruiting 13,000 additional neighbourhood police officers, PCSOs, and special constables. Additionally, the government plans to construct 14,000 new prison places by 2031 to ensure dangerous offenders are securely incarcerated.