HEADS were noticeably weary at the World Economic Forum in Davos last week. Not from alcohol – the receptions were restrained – but at the banker bashing.
“I am so bored of it. It’s time to talk about the future not the past” was a typical comment. Of course, you would expect the masters of the universe to say that, but even the servants of society who hang around that Swiss ski resort were thinking we need to look forwards not back. Indeed, as far as the economy goes, that is exactly what we need to do.
We have been through a major financial and fiscal crisis, the like of which our generation has never seen. Now we have a barrage of regulatory changes, not all misguided, to stop a repeat of the banking crisis, and the government has plotted its difficult course to rebalance the budget.
But, as the drop in GDP last quarter shows, although we are taking the medicine, we are not fully recovered.
We have rising unemployment, shaky business confidence, a fragile housing market, too-high inflation and thousands of worried public sector workers. The answer to this is not to dwell on past problems, but to chart the course ahead. The specific cure for our ills is obvious, even if the means to achieve it aren’t: growth. We now need a war-like national effort to promote economic dynamism. The chancellor knows this, and will use his budget next month to boost growth. It is the Treasury that must take the lead.
The chancellor must plot a course for lower taxes – proven beyond doubt to promote growth. He is already committed to lower corporation taxes and personal taxation for those on low incomes, both of which will help.
But he could go further – giving tax breaks to start-ups and venture capitalists. He could bring back enterprise districts to regenerate poorer areas, and give tax breaks to companies setting up European headquarters in London, to stop them moving to Dublin.
But more than this, the government should test all its policies against the criterion: will they help growth? The bribery laws will clearly hurt UK Plc and the government should reconsider them; pension ages should be extended; union powers curbed; skilled immigration enhanced; planning controls eased up; aviation capacity increased. The government must also speak out with confidence about the many opportunities that Britain offers to investors and workers alike.
If we don’t focus on the future, we will be trapped in the past. And with the past few years being the most miserable on record, the future is clearly a better place to be.
•Anthony Browne is an adviser to the Mayor of London