Today's Autumn Statement is likely to see various wheezes unveiled. Money will be made available to boost capital projects, we're told. £5 billion that would have been spent on one part of the public sector will be spent on another, apparently.
All good stuff, I'm sure. But look at the bigger picture.
The national debt (two left hand columns) will double in just five years, getting ever closer to total annual economic output.
Against all that, the expected £5 Billion to boost output by building infrastructure (almost invisible right hand column) looks kind of piddly. (Speaking of infrastructure, how's airport policy coming along?)
Far too little has been done, thus far, to renew our economy.
Where is the bold supply side reform? Where is the radical overhaul of our Byzantine tax system? The Eurozone might be flatlining – so where is the shift in trade policy to enable us to better access the fast growing global economy beyond?
Whitehall's approach remains much as it was under Gordon Brown; a reliance on cheap credit and monetary stimulus, a misplaced obsession with demand and a mistaken belief that corporatism is free enterprise.
The Treasury prescription remains wrong because so much of their diagnosis remains flawed. Team Treasury still do not appreciate that it was cheap credit and malinvestment that landed us in this mess. And that it was cheap credit that explains why, for a generation or more, we've over consumed (lots of shopping malls) and under produced (not so many factories).
Years of cheap credit was used by successive governments to mask declining Western competitiveness. Until we face up to this, there is little chance that we can begin to address the underlying problems of uncompetitiveness.
Let's hope we hear about a bit more than a few tax tweaks or corporate handouts this afternoon ....blog comments powered by Disqus
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