Liz Truss appeared to suggest her mini-budget may have paid off long-term as her new taskforce warned the UK risks lagging behind other nations unless it tackles stagnation.
Britain’s shortest-serving prime minister likened sluggish growth in recent years to a “boiling a frog situation” as she attended an event to launch the Growth Commission.
Members of the taskforce made grim predictions on Wednesday for the UK unless it harnesses the opportunities of artificial intelligence (AI) and other technological advances.
US economist Tyler Cowen told an audience in Westminster that living standards in Poland could exceed Britain in a decade unless the economy is boosted.
“We actually live in a world where it is imaginable that in less than 10 years living standards in Poland have exceeded living standards in Britain,” he said.
“Don’t blow this opportunity, the stakes are remarkably high… I’m very optimistic but to get it right my core message would be we really do need to focus on economic growth.”
‘Boiling a frog’
Truss plays no formal role in the commission beyond having convened it and was sitting in the audience rather than onstage during the talk.
She was later overheard saying: “We’ve been through a boiling a frog situation… It hasn’t dramatically gone away but it’s got worse and worse.”
Co-chairmen of the commission Shanker Singham and Douglas McWilliams told the event that sluggish growth was not exclusive to the UK but a pervasive problem in G7 countries.
But McWilliams added Britain in particular does not seem to have got its “mojo back” in post-Covid years. He claimed improving competition would be key to boosting growth.
Singham said economic modelling should be more “dynamic” – meaning it takes into account the long-term impact of issues like tax policy – so people understand the “cost” of decisions.
Three per cent growth
The commission has suggested “consistent” growth levels of three per cent can be achieved by 2040 but has not made policy recommendations for how this figure might be reached.
It said its initial work is focused on highlighting the problem and aims to produce further analysis around major fiscal events to investigate how struggling economies can transform.
The launch comes shortly after Chancellor Jeremy Hunt said he is prioritising tackling inflation over tax cuts, in a blow to Tory MPs clamouring for a pre-election giveaway.
Growth was the dominant preoccupation for Truss, who railed against the “anti-growth coalition” during her bid to become Tory leader and subsequent short-lived spell in No 10.
Press Association – by Nina Lloyd