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Britain needs a new economic strategy to end its stagnation and close its £8,300 living standards gap with its peers.

(173 Posts)
DaisyAnneReturns Sat 09-Dec-23 12:08:19

This is a recent report from the Resolution Foundation (4 December 2023)

My interest was sparked by a discussion on the latest Rory and Alistair chat - link below. It starts at 20.21 and there is a transcript running along side it for those who like reading with their watching and listening.

I am going to start reading the report but must write more cards first and hold this as a reward smile Hope some find it interesting.

www.resolutionfoundation.org/press-releases/britain-needs-a-new-economic-strategy-to-end-its-stagnation-and-close-its-8300-living-standards-gap-with-its-peers/

www.youtube.com/watch?v=ADM6vpF4_7k. The Rest is Politics

MaizieD Sat 09-Dec-23 17:29:46

I haven't read the whole report, which is some 200+ pages long. I have no doubt that their analysis of why the UK economy is doing badly and incomes have failed to rise is probably correct. However, their proposals for the future management of the economy fall on this proposal:

Governments should run a primary surplus in good times to ensure that fiscal support in bad times does not put public sector debt on an unsustainable path. Our analysis suggests that, with better monetary and fiscal policy, a primary surplus of 1 per cent could be sufficient.

('fiscal support'= government spending)

This is treating the national economy ass though it should be run like household or a business. But it isn't either and to do so would be damaging to the economy. The government issues the money in the economy; a surplus implies that it takes out, via taxation, more than it issues. This will not happen because the money it puts in will never be entirely returned to it via taxation as people have a tendency to save some of their money rather than just spend it all.

If the government taxes enough to recover the money it has put into the economy it will actually drain money out and leave people with less to spend. Yet the economy depends on people spending in order to grow.

This article from Economics Help explains what the problem is:

Should government run a budget surplus?
17 November 2019 by Tejvan Pettinger

www.economicshelp.org/blog/152634/economics/should-government-run-a-budget-surplus/

DaisyAnneReturns Sat 09-Dec-23 20:05:01

You can also watch an "event" when this report was released. The speakers were:

www.resolutionfoundation.org/events/ending-stagnation/

DaisyAnneReturns Sat 09-Dec-23 20:56:59

You are destined to feel alone with your view of the economy, sadly Maizie. I thought there were some real nuggets of truth but sadly rather like Hunt and Starmer at the conference, you don't seem able to look outside your Echo Chamber. Try watching the conference; they put forward some interesting thinking which you might find fits.

I did like the quote from the guy who summed up at the end.

DaisyAnneReturns Sat 09-Dec-23 21:01:17

Missing speakers:

Jeremy Hunt MP - Chancellor of the Exchequer
Keir Starmer MP - Leader of the Opposition
Mark Drakeford MS - First Minister of Wales
Zanny Minton Beddoes - Editor-in-Chief of The Economist
Dame Sharon White - Chair of the John Lewis Partnership
Dr Swati Dhingra - MPC Member
Andy Haldane - Chief Executive of the Royal Society of Arts
Professor Diane Coyle - Director of the Bennett Institute for Public Policy at Cambridge University
Stephanie Flanders - Head of Bloomberg Economics
Christina McAnea - General Secretary of UNISON
Martin Wolf - Chief Economics Commentator at the Financial Times
Tom Riordan - Chief Executive of Leeds City Council
Professor David Edgerton - Professor of Modern British History at King’s College London

ronib Sat 09-Dec-23 22:30:11

I was a bit distracted by Rory Stewart’s jerkin - now was it a repurposed jacket with the sleeves removed? Or a genuine jerkin?

Casdon Sat 09-Dec-23 22:36:01

Mark Drakeford was there DaisyAnne, there are pictures online of his speech.

Casdon Sat 09-Dec-23 22:40:40

And Keir Starmer was there, here’s his speech.
policymogul.com/key-updates/33199/keir-starmer-speech-on-securonomics-at-the-resolution-foundation?topic-id=none

DaisyAnneReturns Sat 09-Dec-23 22:51:23

I wish you could see me giggle. That doesn't happen often, thank you. "My bad" as they say, I missed the speakers list off a previous post Casdon They were all there smile

DaisyAnneReturns Sat 09-Dec-23 22:56:05

Dropped sleeves are very this year ronib.

DaisyAnneReturns Sat 09-Dec-23 23:00:43

That should have been dropped shoulder. Sorry.

ronib Sat 09-Dec-23 23:09:52

It’s hard to keep up to date but the jerkin did look like an unusual recycling attempt - probably adding to green credentials? The sleeves were dropped? No worries……

MaizieD Sat 09-Dec-23 23:29:46

DaisyAnneReturns

You are destined to feel alone with your view of the economy, sadly Maizie. I thought there were some real nuggets of truth but sadly rather like Hunt and Starmer at the conference, you don't seem able to look outside your Echo Chamber. Try watching the conference; they put forward some interesting thinking which you might find fits.

I did like the quote from the guy who summed up at the end.

You may like to think that I am alone in my views, but there are plenty of economists who have the same. Where on earth do you think I get the information from that informs my views?
Of course you won't find them at the RF conference because they won't be supporting their proposals.

References to 'echo chambers' are just plain rude. At least I've taken the trouble to try and study the subject and apply some critical thought to what is said. You should try it some time.

I'm interested to know what you thought of the article I linked to. It explained the situation very clearly.

DaisyAnneReturns Sat 09-Dec-23 23:30:34

I think it's a gilet not a jerkin.

ronib Sun 10-Dec-23 05:27:35

But when so many public services have been denied adequate funding, surely it is simply wrong to run even a one percent budget surplus? Think how schools could benefit from extra funding for example?
Or have I misunderstood some fundamental principle?

MaizieD Sun 10-Dec-23 08:24:10

ronib

But when so many public services have been denied adequate funding, surely it is simply wrong to run even a one percent budget surplus? Think how schools could benefit from extra funding for example?
Or have I misunderstood some fundamental principle?

Who are you addressing that question to, ronib?

ronib Sun 10-Dec-23 08:32:49

Anyone who can answer it MaizieD.

Whitewavemark2 Sun 10-Dec-23 08:39:00

Britain desperately needs investment for growth. I haven’t read the links - so I’m probably talking at a tangent.

Investment from the government and from capital.

Investment both for growth and for greater productivity, which has fallen so badly over the past few years.

We also need to make it as easy as possible for our businesses to trade with our neighbours - there of course the solutions are obvious.

There are two vital areas imo for investment for growth - housing and climate change. This can be lead by government.

Investment by capital for greater productivity will follow once the U.K. opens up once again for business and recognises what a huge market it has on its door step.

I notice that a deal has been done with the EU regarding EVs and Nissan. However frictionless trade is the obvious and most attractive answer.

MaizieD Sun 10-Dec-23 08:57:17

You're absolutely right about needing investment, Wwmk2, and ronib is right in querying the effect of a 'surplus', but until the household budget myth has been overcome and while the 'how are you going to pay for it?' question is still a political killer we are stuck with these bad economic proposals. They really are the epitome of the definition of insanity; doing the same thing over again and expecting a different result.

M0nica Sun 10-Dec-23 09:22:07

Maizied Far more economists do not share your view and I am among them.

We need to do far more to encourage the internal investment in British business by Briish business and the British publi'

One of the biggest problems facing this country is that so many companies especially utility companies are now owned by foreign entities, as are our media, and this is on the edge of growing. and as far as this govrnment is concerned the whole of british business is for sale to the highest bidder, regardless of its effect onthe public good.

Much of this investment, especially in utilities, is being made by Sovereign Wealth funds. The first Sovereign Wealth fund was set up by Norway, when the offshore oil and gas industry, with the admirable purpose of harvesting the bonus of the profits from oil and gas to serve Norway long term and not economically destabilise it short term.

Since then the concept has expanded and now almost any country with a huge source of wealth and a small economy has a sovereign wealth fund - and is investing it in the UK. This is why so many gulf states; Qatar, Abu Dhabi, Dubai are buying up british water companies, for example.

The only shareholders these funds have is the national governments, which is why Thames Water is in such a bad financiial way. Ownership is overseas, the wealth funds are the shareholders and they bleed the company and country dry.

It suits these funds that we do everything we can to keep wages down, and if these means employing labour from poorer countries to do so then we should encourage the migrants that will accept low wages.

As with Sovereign funds, what started as a sensible solution to a specific problem, has ballooned out of proportion. Importing labour should be a solution to a short term problem only.

ronib Sun 10-Dec-23 09:42:26

Bit confused Monica - Thames Water has a list of its shareholders online and it is not the case that national governments are its only shareholders.

Katie59 Sun 10-Dec-23 09:55:18

The root of the is lack of investment and growth, for many years the government has been borrowing to fund public services rather than growth, the policy of lower taxation has made it harder the fund growth.

All lower taxation has achieved is to make the rich richer and the poor poorer, the countries that do have a budget surplus or at least a balanced budget have higher taxation, Norway and Denmark in particular but other Scandinavian nations have much less borrowing. However they also have much smaller populations and more natural resources so not really comparable with the UK.

If we want the better public services we should be prepared to pay for them ourselves and not borrow, borrowing in this way does nothing to increase growth, as we’ve seen over many years borrowing has increased, growth has been below inflation.

Unless taxation is increased and less is wasted I don’t see any chance of enough investment in growth being made.

DaisyAnneReturns Sun 10-Dec-23 09:57:59

I don't like to think you are alone Maizie, and I am sorry that you haven't realised that. Obviously, there are other groups elsewhere where everyone believes in the theory you seem to put before any other discussion about the economy.

You have referred to Echo Chambers in the past and the overused word "rude" can mean nothing or anything you want it to. For instance, I could suggest it is "rude" to try and derail any discussion about our economics, by insinuating you know better than the each and every speaker and anyone posting views contrary to yours.

I am not, any longer, interested in the articles you suggest on economic topics. Your thoughts otherwise are still ones I often find interesting.

M0nica Sun 10-Dec-23 10:00:16

ronib they are the oens that pullthe strings and they ahve changed in recent years, while the damage goes back decades.

Curtaintwitcher Sun 10-Dec-23 10:01:35

I don't know the first thing about finance. However, I am a housewife like millions of others, and how I choose to spend my money has an effect on the economy as a whole. I wish more people realised this. I support British business as much as possible. Companies which are owned by foreigners mean that much of their profits go abroad, rather than benefiting our own country.
I no longer buy Cadbury's chocolate, but buy from the small British chocolatiers, whose products are actually of much better quality. I buy my groceries from British-owned supermarkets, which employ British people and support local suppliers.
It just needs people to be more aware of where they do their shopping and who benefits from the money they spend.