Simon Haskel on the future direction of the UK economy, beyond the EU referendum
Today in the House of Lords, I have a debate on the future of the UK economy. A debate that I would have liked to have called ‘Bremain’ but was advised to look beyond the upcoming EU referendum.
Those who advised me on the title are of course, right: there is life after the 23rd June. Possibly a life more turbulent because added to the old pressures may be the uncertainties of protectionism and trade wars. Even more so, given the potential outcome of the US elections. Then there’s the effects of excess capacity in China. Redundancies in the UK oil industry even though the price per barrel. Plus the fall in manufacturing output since the last debate.
In addition, we have seen sentiment moving away from our preoccupation with the deficit. Two weeks ago the OECD and IMF both suggested that the UK might have avoided low investment in our infrastructure, rising inequality and poor productivity by growing out of our financial difficulties instead of cutting costs.
And there is more of a social dimension too. In recent months, Ministers when speaking of the economy has also referred to increased life chances. Of helping people facing economic challenge and disadvantage; a more generous, more humane, concern about people’s economic insecurities and difficulties. Does this mean that the government is coming round to this way of thinking that the market has to serve people – and not just business? Does this mean government intervention not only when there is market failure but also environmental and social failure?
For some time, many people have felt that things are not working out as they should and that the cost of austerity in social terms could be much larger than the benefit. Now there are important allies whose “disquieting conclusions”, as the OECD puts it, is that these policies increase inequality that undermines economic growth.
Earlier this week, I heard a major city investor say they now look for good social, environmental and governance factors as a condition of investment – so called ‘seg Investments’ – because that is where they are finding competitive advantage.
When people feel more secure about the welfare state, they become more willing to accept change. More willing to accept the onset of intelligent machines and robots, and the digital economy which disrupts working patterns. To the extent of 47% of existing jobs, I do not know. Meanwhile, we are stuck in a jobs rich, low investment, flat productivity, stagnant wages, lacking in skills economy. With many workplaces reluctant to utilise labour saving technologies.
So today, I will challenge the government with a few questions.
Are we a stronger economy when we have a vision for The Single Market later this month? Are we a stronger economy when we have political control of our basic services and industries? Are we a stronger economy when we carefully invest in our future with a long term strategy? Are we a stronger economy when our banks compete? Are we a stronger economy when there is a safety net to see all of us through these hard times of economic and technical change?
These ideas are not new but they do need active implementation. The recent papers from the OECD and IMF are just one more nudge in this direction. A nudge to which I hope Ministers will pay attention.
Lord Simon Haskel is a backbench Labour Peer and businessman. He tweets @simon_haskel
Published 9th June 2016