Why be a poor version of Germany instead of doing what we do best?
It’s time to get serious about the British economy. Yes, we are a member of the family of high-income nations, but we are a long way from the top of this group and the gap has been widening. Growth ground to a halt in March and the OECD forecasts the UK economy will not grow at all in 2023, a worse performance than any G20 country bar Russia.
Such predictions of future underperformance should be treated as highly uncertain, but our recent experiences of it are painfully concrete. We caught up with more productive countries such as France, Germany and the US during the 1990s and early 2000s. But that came to an end in the mid-2000s and our relative performance has been declining ever since. While we are not yet in danger of relegation from the top division, we are increasingly a long way from qualifying for the Champions League.
Our productivity growth in the 12 years since the financial crisis has been half the average across the 25 richest OECD countries. This slow growth combines with high inequality to mean our poorer households are very significantly poorer than their equivalents in France. We cannot go on like this. Both main political parties recognise the need for change. The former chancellor Rishi Sunak rightly noted that consistently weak investment by British firms was holding back growth, while Rachel Reeves, the shadow chancellor, points to weak growth as a key reason the tax burden is rising. But a growing consensus about the problem is very different to being serious about the solution.
We are not, for example, even serious about the fundamental building block of any renewed economic strategy: what kind of economy the UK is. Commentators often talk of the British economy as being narrowly built on banking,
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