Britain will suffer a decade of low productivity growth and stagnating living standards without billions of pounds of investment, the Government has been warned.
The Work Foundation said £4.5 billion should be spent on science, technology, innovation and regional growth.
In a submission ahead of next week's Autumn Statement, the research group called for a new plan for growth, including an extra £1 billion for the regions and £300 million for science and technology schemes.
Ian Brinkley, director of the Work Foundation, said: "We believe the Government has scope to relax the pace of deficit reduction in the short term in order to directly fund new investment and stimulate growth.
"While there are legitimate concerns about the impact this may have on the markets, there is less likely to be an adverse reaction if the stimulus is clearly focused on creating assets and underpinning sustainable growth.
"We therefore think that it would be a mistake for the Chancellor to go for expensive short-term tax cuts.
"The money would be much better used if channelled into additional infrastructure investment, supporting the science, design and technology base, and strengthening innovation-focused institutions."
