Tim Montgomerie is in full-on never waste a crisis mode today. Given the doom plastered across all the front pages (The Sun excepted) this is a good time for wheeling out old favourites:
With the world economy facing such a bleak decade this is no time for half measures. We need to be cutting taxes on business and funding them with deeper cuts in the over-sized state. We should be suspending environmental measures that are imposing heavy and futile costs on our manufacturing industry. We shouldn’t be loading new regulations on our banks until the economy is strong again. We need them to be lending. We need reform of competition policy, sale of public sector assets, regionalisation of the minimum wage, no-strike agreements in the public sector and refocusing of trade policy on bilateral rather than multilateral agreements. We should also realise that we can’t afford bailouts for broken Eurozone economies.
Fair enough. The trouble is, however, that this kind of stimulus (for that’s what it is, the argument between left and right being about types of stimulus, not stimulus itself) is best suited to keeping firms afloat in heavy seas. That’s a worthy cause but not likely to be enough to kickstart economic growth. And why should we expect it to since, almost by definition, it’s about encouraging or nudging firms to make decisions that, with circumstances being what they are, they’d sensibly consider imprudent. Certainly these measures, if implemented, might help. But the government’s ability to influence the ecoomy for the better is severely limited even in happy times. And these are not happy times.
Moreover, if the eurozone goes kaput and the United States slides back into recession all the British government can do is try and tough it out. There is not a lot of wiggle room.
Tim concludes:
In addition to the policy measures we need a national conversation about the challenges ahead. Cameron and Osborne should be telling voters that this is the payback decade – a decade in which we free ourselves from massive public and private debts. But it can also be the competitiveness decade in which – through mighty reforms to schools, welfare and the tax system – we prepare Britain for a world where China, India and Brazil will eat our lunch if we don’t renew ourselves. At the moment there is little sense of mission or urgency. That can’t change soon enough.
Again, fair enough. But there is a contradiction here, at least in the short-term: if this is the payback/consolidation/retrenchment decade then it doesn’t seem likely to be a growth decade. Tim’s probably right that looking to the long-term is an important part of this government’s job but that, almost by definition, concedes that hopes for vigorous growth in the short to medium term are likely to be disappointed. Just as the government’s plans for welfare and education will take two terms to deliver so too, perhaps, will its hopes for the economy. Which is a problem since getting that second term is also a rather acute, political problem.
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