Main parties will not have serious debate

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

The main focus of the debate on economic policy in the run-up to the election is becoming increasingly clear. More importantly it is apparent what will be virtually ignored.

Fiscal policy will be the overwhelming centre of attention in the election debate. More precisely it will be on exactly when cuts should be made, exactly where they should fall and exactly how large they should be. There is not even a debate about whether tax rises would provide a better way of tackling the deficit or, more importantly, whether there is an alternative to austerity.?

For all the personal bile in the rows between the parties there is little difference of substance. Mostly the spats are a form of bluster. To the extent there are disagreements they are about the precise details of managing Britain’s deteriorating fiscal position.

Economists have only added to this narrow fiscal obsession. Three factions of economists have written open letters expressing their view on the precise form that the end to the fiscal stimulus should take. Politicians have been quick to latch on to whichever group of economists has supported their position.??

What all this leaves out is any substantial discussion of how Britain can rejuvenate its economy. Of how it can generate consistent and rapid economic growth. For such growth is key to minimising the pain involved in tackling the fiscal deficit and providing the basis for a prosperous long-term future.

For example, Gordon Brown’s emphasis is on securing the recovery. For an election with a five-year time horizon this reveals abysmally low ambitions. Securing the recovery–ensuring Britain does not plunge back into recession–essentially means leaving the economy more-or-less where it is.

It is true that Brown sometimes talks about going for growth. But usually what he means by the phrase is starting to make cuts a bit later rather than a bit earlier. His is not a perspective for long-term growth.

If Labour does win the election no doubt Brown will suddenly see the need for cuts as more pressing. In the next few months, with an election looming, he does not want to start imposing austerity.

But it would be wrong to single out Brown for being uniquely bad. None of the main parties are seriously discussing how to promote innovation or encourage higher productivity.

If there is to be serious debate about economic policy in the run-up to the election it is not going to happen among the main political parties.