Crossing the Rubicon – what it really takes to grow an economy
Helm Talks - energy climate infrastructure & moreShow Notes
Economic growth is the government’s new mantra, but what exactly does it mean, and how exactly is it achieved? Who is going to pay for it? The government does not appear to have answers – at least, not ones that are credible and likely to create sustainable economic growth.
Growth involves a more than simply announcing big projects: three new runways and nine new reservoirs and the largest theme park in Europe – the government’s aspiration is to announce 150 projects by the end of this Parliament. Despite Tony Blair’s description of politics as being “and/and”, the reality is that it’s “either/or” – there are always trade-offs to be made.
This podcast explores what really lies being these announcements: the real choices and the trade-offs that need to be made, and what actually causes economic growth.
More from Helm Talks - energy climate infrastructure & more
Many voted to stay in the EU (including me). Rejoining the EU may sound simple, but the Europe Britain left no longer exists. With a string of major elections approaching and far-right nationalist parties surging across the continent, a future EU could be shaped far more by figures such as Le Pen (France), Meloni (Italy) and the AfD (Germany) than by the centrist consensus of the past. If a more Gaullist Europe emerges, one of the biggest obstacles to re-entry may be a simple question from Brussels, Paris and other capitals: why would they want Britain back?
Britain faces a crisis of delivery. From nuclear power stations to airport runways and water infrastructure, costs have spiralled and timelines have stretched into decades. How has a major modern economy become so incapable of building what it needs? From amongst the most expensive nuclear power stations in the world, to huge costs for airport runways and the absurdities of the HS2, Britain is an infrastructure basket case. This matters not least to ensure that the economy can grow, as the politicians keep talking about.
As oil prices continue to fluctuate in global markets, Britain’s energy costs have become a distinctly British crisis. They cannot be explained away as a temporary consequence of global events. Industrial electricity prices continue to be among the highest in the developed world, consumer bills remain high, and there is little prospect of relief even in the longer term without a fundamental rethink of policy.
Recent prime ministers have become very good at the politics of the long grass, and Andy Burnham is at risk of following this line. Promise the big things: growth, clean rivers, better defence, cheaper energy, new nuclear, decent transport and social care. Then push the hard choices beyond the next election, offer short-term palliatives, and hope that someone else will eventually pick up the bill. The result is not merely delay; such an approach actually results in higher costs in the long term, weaker infrastructure, and yet another obstacle to the growth that he, and many of his predecessors claim to want.
Following on from the latest change of Prime Minister and announcements about his new Cabinet, what is going to change? Andy Burnham has a new ten-year plan, and is promising a fundamental revision of politics, but Britain’s deeper economic problems remain unresolved. The fact is, underneath the headlines, the country is still trying to live beyond its means, with high borrowing, weak growth and rising debt interest putting serious pressure on its public finances.