Britain lacks growth strategy

In: Uncategorized

11 Jan 2010

This is my comment from this week’s Fund Strategy.

Barring an apocalypse it looks certain there will be a general election in Britain over the next few months.

Yet none of the main parties has convincing policies for the restoration of economic growth. Indeed, they all embrace policies that are likely to damage Britain’s growth prospects.??

Although the parties have yet to publish their manifestos they all have statements of economic policy on their websites. It is also possible to discern a party’s trajectory by scrutinising statements by its leaders.?

Strangely they all seem to follow a similar pattern. They start with pledges of measures to support particular groups. Whatever the merits of the supposed beneficiaries it is hard to see what bearing they have on reviving the economy. And if the economy cannot be rejuvenated then many of these promises will not be kept.

Then there are the buzzwords which indicate that the party concerned is intent on limiting its aspirations. These include such terms as green, responsible, sustainable and low carbon.??

Although these might appear common sense they are essentially a way of indicating support for restraint. For example, why would anyone want economic performance to be sustainable when it would be far better to have a transformation to something better? The notion of sustainability embodies a deeply conservative outlook. It is an updated version of the idea that aristocrats should exercise stewardship of the environment for the sake of other generations.??

A similar point could be made about responsible policy. It means keeping demands strictly limited rather than engaging in any bold ambition.??

To be sure, all the parties make some of the right noises such as acknowledging the need to invest in infrastructure. Yet they are vague about how it can be achieved.

Typically they make at least two fundamental errors. First, they do not recognise that to build a vibrant new economy they need to let go of the old. Some old companies and sectors should be closed down while new ones should be encouraged to take their place. If this is done in a co-ordinated way it should be possible to minimise any social dislocation that results.

Second, they pay far too little attention to the productive side of the economy. The overwhelming emphasis is on such matters as bolstering the consumer, financial regulation and skills training. However worthy any of these causes they fail to get to the nub of addressing Britain’s economic weakness.

As Britain enters a new year it should be willing to embrace change. Not as a platitude but as a process of genuine economic and social transformation.