Presently we are all running up the hill chasing growth.
By growth we mean year on year increases in Gross Domestic Product or GDP.
This is meant to be a good thing for the economy as a whole but that depends on many factors.
A national growth rate of 2.5% can hide huge regional disparities in our country. Although the average growth rate can be 2.5% it could mean 5% in London and the South East and only 1% in the North East!
The regional distribution of growth in the UK is crucial as are its effects within regions as well.
Such micro based analyses should be undertaken to try and guage the wholistic success of such a growth policy.
There is little use in adhering to a national growth target if regional growth differences are not levelled up. The government doesn't appear to have addressed this at all.
Yet that is what appears to be happening.
What are the factors which drive growth?
These can be characterised by:
Innovation and entrepreneurship
Competitive markets
Identification and exploitation of market opportunities and environmental scanning
Investment in labour force training and improving our historically low productivity
Investment in capital, plant and technology
Provision of world class infrastructure and transport
Introduction of incentives to succeed
Adoption of a growth culture
Introduction of imaginative long term financing options
Ensuring the benefits of higher growth are equitably shared across the regions of our country
In many ways the last point is the most important here. Everyone not just someone must benefit from growth. This is where the UK has failed in the past.
Currently our unfunded tax cuts of some £43bn are supposedly going to get us a cumulative growth rate of 2.5 % in three years time and 5.1% in 5 years time?
After 5 years we will supposedly start to recover the £43bn tax cuts we have currently instigated.
This is a long time to wait for growth to save us.
Tax cuts funded by borrowing, according to David Ricardo, just lead to future loan and tax burdens for our children's generations.
Is this what we want and need.?
They are just a short term sugar rush gain which will need to be paid for in the future and are not sustainable.
In the 10 points above I have given the issues we need to address in any future growth plan and they don't comprise of unfunded tax cuts which will hopefully be paid for in 5 years time by future growth!
We have taken a huge gamble with our futures not to mention interest rates, the bond markets and the markets' faith in our ability as a country to pay our way.
The Chancellor is going to present more information on how these tax cuts are going to be funded in November 3022.
It must be sooner than that!
In the meantime we must ensure that we take a wider long term view of economic growth and address why our country hasn't achieved like other countries.
This will prove more effective than the short term gains of unfunded tax cuts.
It will also be better for our long term sustainability and operational resilience!
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