Monday, January 25, 2010

How To Stop Britain Going Bust Again

Getting this guy away from the controls would be a good start

I've just read George's piece in today's Times, How to stop Britain going bust again. And you know what? It's good.

He says we must turn away from "the failed model of debt-fuelled growth that led us into this mess", and develop "a new British economic model that learns from the mistakes of the past".

Yes, of course, talk is cheap. But here's what we like:
  1. First and foremost, the "new economic model requires government to live within its means... The overriding objective of fiscal policy must be to provide [a] credible deficit reduction plan... That credible plan must eliminate a large part of the structural deficit over the next Parliament, starting in the coming financial year."
  2. "Britain’s new economic model must be built on saving and private sector investment, not the unsustainable public spending and consumer debt of the past ten years. Exports and business investment provide the key to a sustainable recovery... We need to become competitive again. Simpler taxes with lower tax rates, removing employment taxes on new businesses employing new staff, stopping the remorseless rise of red tape on small businesses."
  3. "The private sector must take the lead, but government must help with a modern planning system... and providing modern transport infrastructure. Above all, with a record one in five young people out of work, government must provide the education, training and welfare reform we need to get Britain working."
  4. We need "a new banking system... a regulatory system that commands confidence, with the Bank of England in charge instead of the old failed tripartite regime... Britain becoming a champion of internationally agreed structural reforms of the kind President Obama proposed last week, rather than remaining wedded to the old unstable structures that the current Government has encouraged."
And what do we not like?

Well, despite the manifold climate swindles that are now coming to light on a daily basis, George still wants to spend more of our money on "green investment"; there's still no indication of what spending he'll cut, or how he'll stop himself raising Vat; removing "a large part of the structural fiscal deficit over the next Parliament" may not be ambitious enough to head off the rise in interest rates; and there's no mention of serious money-saving public sector reform, such as fiscal decentralisation, or breaking up the NHS, or even ending national pay bargains.

Still, for all that, this is a distinct whiff of that old time religion - government to be be hacked back, both in terms of spending and regulation; growth to be driven by the private sector, fuelled by lower taxes and a bonfire of controls; working age benefits cut to reduce indolence and vice; structural reform to stop too-big-to-fail bankers gouging taxpayers via open-ended guarantees.

All he's got to do now is deliver.

Which we will be watching very closely.

PS Does it matter that tomorrow's ONS report will (probably) show our recession ended in 2009 Q4? Well, clearly it's better that we're no longer heading down, but apart from that, there won't be much to shout about. We will still have lost around 6% of our GDP since the peak, and we'll be 10% below where Clown Brown predicted we'd be by now. What's more, GDP growth from here on is likely to be pretty sluggish, even with our improved competiveness from sterling's collapse. Apart from anything else, government spending has to be cut, taxes are heading up, and there's no way interest rates can stay down at current levels. So let's see how much puffing the Clown attempts.

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