Britain’s recovery is weak. Some public services could disappear completely over the next five years. Yet, the Conservatives want to deliver tax cuts for the rich. And no one is talking about the real issue: productivity. And the fact that our over-bearing financial services industry almost ensures we don’t invest in productive assets (80% of bank loans go on property and other non-productive investments). The UK’s political elite is talking to us from a parallel universe.
The Resolution Foundation’s chief executive, Gavin Kelly, remarked last week:
All parties are framing the deficit as a fiscal choice. They have said very little about productivity.
LSE’s John Van Reenen said something similar in his review of the budget:
It is surprising and depressing that the Chancellor neither mentioned the productivity problem nor did anything to address it.
As did the FT’s Martin Wolf:
[I]t is misleading to view the main challenge as fiscal. It has also become clearer that the crisis both revealed and caused structural weaknesses that the government has neither recognised nor addressed. The opposition Labour party shows no sign of recognising the weaknesses either. What are they? Simply, the economy is “ex-growth” — underlying growth has stopped. Against that background, the aim enunciated by the chancellor “for Britain to become the most prosperous major economy in the world” is absurd. Here are three indicators…
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Peter Batt 