What do Labour mean by a "growth strategy"?
Discussion
AJS- said:
12gauge said:
This is the problem. Our ONLY salvation can come from export led growth.
Why export led? There's nothing wrong with exports, but they're no holy grail either. Politicians targeting things like exports is a really bad idea, as they will take it as a cue to muck around with the currency and things when they realy shouldn't.
We must grow UK business so as to employ more people and earn more money but we need businesses that can focus on targetting clients who have money to spend so these means looking outside of the UK for them.
Our multinationals are very good at this but it is vital that we have the middle tier of the corporate economy growing as these employ more and pay more tax. The main areas are the financial sector, manufacturing and service sector.
So, in the past the arguement for exporting more has been one of balance of payments but this is very much on the backburner, the reason to export more today is that the people with the money to buy stuff are not in the UK but in other countries. It's one of the reasons why DC is obsessed with India and in my eyes rightly so. We have a better chance of exporting to India than we do to China or South America.
People love manufacturing because they think back to the days when it employed millions but it's not possible to go back to those days but investment in factories and tech can still allow the UK to manufacture goods at a better rate and quantity than other countries.
Germany has had to become good at exporting goods as their local market are not avid buyers but net savers. Britain has overnight gone from being net spenders to being forced not into being net savers per se but not having any money to continue spending.
My favourite example of a brilliant Western manufacturing business is someone like Osram. They aren't labour intensive but churn out a simple and cheap product by the million and sell across the globe. In the UK we have better global distribution abilities due to our number of ports and sea lanes to all continents as well as massive air hubs. We also have all the expertise needed to create an 'Osram' so we need to look at why this hasn't occured.
I think two main problems are firstly we dont have the right funding culture to invest and create such a firm and secondly, at the other end we seem to lack the ability to go out into the world and win contracts in quite the same way as others.
Dracoro said:
I think the problem we have is the wrong political party in power at the wrong time.
In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit.
This actually happened - when Labour were campaigning for the 1997 election, they committed to maintaining Tory spending levels for several years (3 if I remember correctly) - during this time, there was a huge budget surplus & Brown paid off an enormous amount of national debt (remember Prudence & the Iron Chancellor?). Needless to say when that pledge expired, the taps were turned on...In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit.
They’d stand a better chance of promoting jobs and growth if they got their heads out of their arses and recognized the connection between people having money to spend on stuff and the positive effect that this has on employment and the economy. Perhaps if we weren’t being screwed to within an inch of our lives by the utility companies and the tax man we might be able to achieve this. Higher interest rates to increase the value of the pound relative to unavoidable living costs, combined with lower taxes, might leave us with something left to spend on more than just bills. More quantitative easing – the favoured route for politicians – is simply trying to solve a problem by doing more of what caused it in the first place. Sooner or later they have to get their heads out of their backsides and face up to inflation, and if the housing market has to bomb for this to be achieved, then so be it. It’ll happen sooner or later anyway. The later they leave it the greater the fallout will be.
I've not heard anything from the left of the house about what their growth strategy actually is, but I haven't heard anythign from the right ether.
Stimulating growth through incresed public spending is a perfectly legitimate plan, it got the US through the great depression, but perhaps not a great idea right now, I don't have to tell anyone that instead of saving during the good times the goverment spent in the hope the gravy train would continue, but then so did the pubic, both here and in the rest of the world, hence why we're in a recession now.
What I've been waiting to hear since about 2008 is what we're going to do about re-balancing the economy in the UK. What measures are being taken to create manufacturing jobs here in the UK, and not just making Astras for the US GM and Micras for the Japaneese Nissan a manufacturing industry that employes UK people, but sends the profits back abroad is no better than a service industry Job,.
What tax breaks/penalties can be thought up and afforded so we can make a TV/Car/Computer in Britain, using semi-skilled young British based People that can complete with one that's made in China
I can see no point in allowing us to go back to the old ways of a debt/service industry based economy where the rest of the world lends money to the West, to buy the things it makes.
Personally I couldn't give a flying monkey turd about house prices, unless someone's talking about a gradual depression of prices over the next 3 years - people borrowing money against over-inflated assets without the income to cover it got us in this mess in the first place.
Stimulating growth through incresed public spending is a perfectly legitimate plan, it got the US through the great depression, but perhaps not a great idea right now, I don't have to tell anyone that instead of saving during the good times the goverment spent in the hope the gravy train would continue, but then so did the pubic, both here and in the rest of the world, hence why we're in a recession now.
What I've been waiting to hear since about 2008 is what we're going to do about re-balancing the economy in the UK. What measures are being taken to create manufacturing jobs here in the UK, and not just making Astras for the US GM and Micras for the Japaneese Nissan a manufacturing industry that employes UK people, but sends the profits back abroad is no better than a service industry Job,.
What tax breaks/penalties can be thought up and afforded so we can make a TV/Car/Computer in Britain, using semi-skilled young British based People that can complete with one that's made in China
I can see no point in allowing us to go back to the old ways of a debt/service industry based economy where the rest of the world lends money to the West, to buy the things it makes.
Personally I couldn't give a flying monkey turd about house prices, unless someone's talking about a gradual depression of prices over the next 3 years - people borrowing money against over-inflated assets without the income to cover it got us in this mess in the first place.
Alex said:
It's not working because the coalition is not actually making any cuts. They need to cut harder and faster, and cut tax.
terrysmithblog said:
Tim’s research explodes the myth that the UK economy is struggling under the impact of government spending cuts. Government spending was cut by just 1.5% in 2011-12 and is only planned to fall by 5-6% by 2016-17 (so far away, who cares?). It is still over £20bn higher than government expenditure in 2008-09 under Labour. More worryingly, it is 50% higher in real terms than it was 10 years ago. As Tim succinctly puts it: what is it that the government wasn’t supplying ten years ago that we now cannot live without? The answer of course is nothing. Expenditure can be radically reduced and needs to be if there is to be any chance of closing the deficit which is currently running at over £120bn per annum and adding to the national debt which is already too high.
Clicky
alangla said:
Dracoro said:
I think the problem we have is the wrong political party in power at the wrong time.
In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit.
This actually happened - when Labour were campaigning for the 1997 election, they committed to maintaining Tory spending levels for several years (3 if I remember correctly) - during this time, there was a huge budget surplus & Brown paid off an enormous amount of national debt (remember Prudence & the Iron Chancellor?). Needless to say when that pledge expired, the taps were turned on...In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit.
Legend83 said:
Er...not sure about that. Reading between the lines of the IMF report it seemed to suggest that the government should borrow more and cut interest rates!
You have to be careful about the context of the 'advice', much of it was suggestions for POTENTIAL actions IF it becomes necessary in the FUTURE.Bitzer said:
On a lighter note, Balls was called an 'Idiot' by Cameron during PMQs today 
And watch Labour and sections of the press now invoke fits of faux outrage.Balls ran the treasury for well over decade. Balls should really think hard about shutting the f
k up. The man clearly has no shame.crankedup said:
Bitzer said:
On a lighter note, Balls was called an 'Idiot' by Cameron during PMQs today
And he is kicking himself for letting Ed Balls get to him! What a fool Cameron is at times.
el stovey said:
This austerity experiment is a very recent economic ideology, in the past UK has actually had relatively bigger deficits. For a developed country with their own currency like the UK or America or Japan, running a massive deficit is perfectly possible. The time to reduce it isn't when the economy is in sustained stagnation.
We are looking increasingly exposed and isolated by slavishly sticking with this austerity policy, which by now everyone can see isn't working.
The public sector might not directly produce wealth but all the employees are buying stuff and spending their money and more importantly not being paid rafts of benefits. They are having kids that in turn also want to work and contribute to society. I think we'll really suffer in the longterm from making so many public sector workers and tax payers unemployed. Many of these people will be permanently out of work. The resultant social decay in some areas will have massive implications on the country for decades to come. Much bigger problems than having a deficit does anyway.
Ive not been earning quite as much as normal and run up some debt , I was wondering do I cut back or would it be better to follow your thinking and get a new car on drip ,re do the kitchen, and borrow for a very expensive holiday... We are looking increasingly exposed and isolated by slavishly sticking with this austerity policy, which by now everyone can see isn't working.
The public sector might not directly produce wealth but all the employees are buying stuff and spending their money and more importantly not being paid rafts of benefits. They are having kids that in turn also want to work and contribute to society. I think we'll really suffer in the longterm from making so many public sector workers and tax payers unemployed. Many of these people will be permanently out of work. The resultant social decay in some areas will have massive implications on the country for decades to come. Much bigger problems than having a deficit does anyway.
Edited by el stovey on Wednesday 23 May 06:42
ukwill said:
Bitzer said:
On a lighter note, Balls was called an 'Idiot' by Cameron during PMQs today
And watch Labour and sections of the press now invoke fits of faux outrage.Balls ran the treasury for well over decade. Balls should really think hard about shutting the f
k up. The man clearly has no shame.turbobloke said:
el stovey said:
We are looking increasingly exposed and isolated by slavishly sticking with this austerity policy, which by now everyone can see isn't working.
Oh wait a minute, we've recently come out of a ten year period where lies, false assertions and personal assassination were a form of government, I suppose truth will make an appearance soon, perhaps not the BBC for a little while yet though.
Gosh, two pages since I started this. Can't answer anyone but lots of good points.
http://uk.reuters.com/article/2012/05/22/uk-oecd-b...Yep, Radio 4 reported her at length at lunchtime, then in the hourly bulletins concentrated solely on her comments about a "growth strategy" being needed, and Ed Balls agreeing with this.
True. I remember this being the main reason they got in power. People didn't trust their economic record and were fearful of rising tax/debt so they said they'd stick to Tory spending plans (which had done a decent enough job after the economic woes of the early 90s) so people would "trust" them. Then, as you say, they got the 2nd term.......I seemd to recall they made a big show about not putting up the basic rate of income tax, then put up NI instead. 
The only way this thread has left me unsatisfied is that we still don't know what a growth strategy is, or should be.
I govern my own finances by the principle that I won't borrow to buy something that won't increase in value. I guess what differentiates a "growth strategy" from generalised public spending would be application of this idea. In other words, money should be targetted in making our economy more productive.
In terms of law rather than spending, we should be making this country more business and export friendly, and yet that seems to be exactly what Labour (and Vince bloody Cable) don't want to happen.
12gauge said:
Mr GrimNasty said:
Christine Lagarde(IMF):
"...you see the gain that resulted from the fiscal consolidation that was decided on 2 years ago has been that result, the credibility of the UK government and it's ability to borrow at extremely favourable rates."
"And when I think back myself to May 2010, when the UK deficit was at 11% and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided... I shiver."
In those few words you have the confirmation of New Labour's incompetence, and the confirmation of the fact that DC and the Tories have achieved a minor miracle so far.
You wouldnt know it watching the BBC. Or the fact the OECD today praised the UK. Osbourne has stuck to his deficit reduction target. Obama on the other hand, who the BBC idolize, has quadrupled bushes last deficit whilst promising to halve it!"...you see the gain that resulted from the fiscal consolidation that was decided on 2 years ago has been that result, the credibility of the UK government and it's ability to borrow at extremely favourable rates."
"And when I think back myself to May 2010, when the UK deficit was at 11% and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided... I shiver."
In those few words you have the confirmation of New Labour's incompetence, and the confirmation of the fact that DC and the Tories have achieved a minor miracle so far.
http://uk.reuters.com/article/2012/05/22/uk-oecd-b...
martin84 said:
Its well and good to criticise Ed Balls for not having a growth plan but the more important fact is the actual Government doesn't have one either.
I still don't know what we are referring to by a growth plan. All Ed Balls will be pinned on is a temporary cut in VAT, then he just waffles.Dracoro said:
alangla said:
Dracoro said:
I think the problem we have is the wrong political party in power at the wrong time.
In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit.
This actually happened - when Labour were campaigning for the 1997 election, they committed to maintaining Tory spending levels for several years (3 if I remember correctly) - during this time, there was a huge budget surplus & Brown paid off an enormous amount of national debt (remember Prudence & the Iron Chancellor?). Needless to say when that pledge expired, the taps were turned on...In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit.
The only way this thread has left me unsatisfied is that we still don't know what a growth strategy is, or should be.
I govern my own finances by the principle that I won't borrow to buy something that won't increase in value. I guess what differentiates a "growth strategy" from generalised public spending would be application of this idea. In other words, money should be targetted in making our economy more productive.
In terms of law rather than spending, we should be making this country more business and export friendly, and yet that seems to be exactly what Labour (and Vince bloody Cable) don't want to happen.
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff