Britain: with the most pro-growth government in history

So says William Hague at the Conservative Party Conference in Manchester. But how fast could the UK grow?

In a report on the World Economy entitled "A game of catch up", The Economist noted: "Economic catch-up is accelerating. Britain’s economy doubled in size in the 32 years from 1830 to 1862 as increased productivity spread from cotton to other industries. America’s GDP doubled in only 17 years as it overtook Britain in the 1870s. The economies of China and India have doubled within a decade."

Foreign Secretary William Hague is by a number of measures the UK's most popular politician and the only one (of the top 18 politicians from the 3 big Westminster parties) with a net positive approval rating, according to a YouGov poll for The Sun. So when he states that this Coalition will be the most pro-growth government in British history, pundits, investors, credit agencies, British voters and other governments are likely to take note. 

Hague said: "Faced as we are with a new situation, in which growth is not automatic, in which people will all the more need skills, and businesses outstanding products, and economies to be open and free, some western nations will make the transition, will reinvent themselves successfully, and some will not." 

He continued, "we intend to go on, to be the most pro-growth government in living memory: creating the most competitive tax system, making Britain the best place in Europe to start, finance and grow a business, cutting red tape that costs businesses £350 million a year, establishing 21 enterprise zones, creating the largest number of apprenticeships this country has ever seen, boosting vocational training and radically reforming welfare to get people off benefits and into work. This week we are announcing radical plans to boost the construction of new and affordable homes, to change employment laws that discourage the taking on of new staff, and other measures to encourage growth and enterprise.We will do all this, to make sure this country is one of those that does reinvent successfully its ability to grow and prosper in the twenty-first century, while we also play our full part in tackling the immense challenges of world affairs."

In its BRIC and later NEXT Eleven (N-11) analyses, Goldman Sachs calculated that by 2030 the Chinese economy will have overtaken that of the US. By then, the investment bank predicted the top ten economies and their relative GDPs (at 2006 figures) will be:
  1. China, US$25,610bn
  2. United States, US$22,817bn
  3. India, US$6,683bn
  4. Japan, US$5,814bn
  5. Russia, US$4,265bn
  6. Germany, US$3,761bn
  7. Brazil, US$3,720bn
  8. United Kingdom, US$3,595bn
  9. France, US$3,306bn
  10. Mexico, US$3,068bn.
However, after the Goldman Sachs reports were written:
  • America was humiliated by a credit downgrade and warned by doomster economists of an impending debt-induced economic collapse
  • Brazil lost five cabinet-level officials in the past few months of 2011 on corruption allegations
  • Britain had a Labour administration until 2010 which bolstered employment in the non-productive part of the economy without correspondingly growing the productive part
  • France's two largest banks were downgraded by credit agencies due to exposure to Greek and Italian debt, and the country persisted with policies which failed to address economic structural rigidities
  • Germany overstretched its resources attempting to save the Euro and bail-out porcine peripheral Eurozone states
  • Japan had six prime ministers in the five years to 2011 and was hit by a devastating and costly tsunami.
The Coalition government in the UK has been in power some eighteen months, during which time it has successfully warded off international investor and credit-rating agency angst by pursuing policies of austerity coupled to a programme for growth.

Sure, there has been civil unrest involving unpredented urban rioting and trade union-inspired mass protests over pension reforms. Yet this government appears to have set its growth goals high. If The Economist is really right, and "economic catch-up is accelerating", then how different will the Goldman Sachs BRIC table look by 2030? Perhaps the UK could outperform in spectacular fashion, despite its relatively small population size when compared to the US, Japan or BRIC nations. But how?

In talking of Britain's competitive position in relation to others, Hague reckons: "Those who do make it will be those who make the most of their human capital, and bring out the best in inventive and hard-working people. And to do that this country can no longer afford a tax system that drives businesses away, an education system that leaves millions underperforming and a welfare system that traps millions more in dependency and despair. 

"This is the immense importance of George Osborne’s goal of giving us the most competitive tax system in the G20, of Michael Gove’s transformation of state schools, and of Iain Duncan-Smith’s determination to make sure that it will always pay to be at work."

Historically, Britain has had an amazing capacity to re-invent itself. The question is, will the British people be patient and enthusiastic enough to enable this government to transform the country yet again?

Check out all commentaries here.   

No comments:

Post a Comment