Friday, August 04, 2006
OECD Collars Brown
As we've blogged many times, Britain's productivity record under Gordon Brown has been appalling. And you don't need a PhD in econometrics to appreciate it: pictures like the chart above just jump off the page.
Gordo of course reckons it's nothing to do with him, or those Big Government tax and spend programmes he's inflicted on us. Interesting then to read a speech delivered last month to his workers- the Government Economics Service- by Jean-Philippe Cotis.
At first blush, you might expect M Cotis to agree with Gordo's socialist economics. After all, he's not only French, but also the Chief Economist of the OECD, an organisation with a long history of pandering to its government paymasters.
But M Cotis wasn't for cosying, and rather cheekily laid out the OECD's conclusions on why Britain's productivity growth- the fundamental driver of all our prosperity, and something Gordo pledged so loudly to improve- has tanked under Labour.
First, the thorny issue of tax. As we know, G has increased both the level of tax and, through fiscal drag, pulled more people than ever into the higher income tax rate band. Jean-Phillipe is clear about the consequences: "OECD research finds that a low tax burden and a low share of distortionary taxes increase... the level of GDP per capita" (see previous blog for more on that OECD growth research) .
Second, all that dosh poured into our underperfoming public services. Again, J-P is clear (or at least, as clear as any French economist diplomatique is ever going to be): "the rapid increase in public sector resources in recent years had a less than proportional impact on outcome... aggregate labour productivity growth would be one or two tenths of a percentage point higher if public sector output were measured by reference to inputs."
To be sure, he also aimed swipes at other problems in our sceptred isle- like our crap education system. But the fundamental message was clear: the key reason for Britain's slumping productivity growth has been Labour's tax and spend policies.
Posted by Mike D at 3:36 pm