The UK “recovery” cannot be sustained. Osborne has failed to rebalance the economy and boost productivity

Productivity - multitasking workerAn Opposition Debate on Trade, Exports, Innovation and Productivity highlighted the fragile nature of our economic recovery. The fundamentals for a strong economy have been overlooked by a Government more interested in short term headlines than our long term economic interests.

The Government’s promise to “rebalance” the economy has not materialised with the UK now having record high trade deficits for 2014 and 2013. Our balance of payments, the amount we import compared to the amount we export, show a trade deficit of £34 billion. However, this figure is mis-leading and masks our trade deficit in goods, which stands at £123.1 billion. Continue reading

What level of investment should Corbyn & McDonnell aim for?

Corbynomics1-2The policies outlined by Jeremy Corbyn and John McDonnell have the capacity to transform the economic debate in Britain. More importantly, if the ideas outlined for an investment-led recovery are implemented then they could alter the trajectory of the British economy, from stagnation and rising inequality towards sustainable growth and a general rise in living standards.

Therefore it is important to examine thoroughly what is the scale of the investment needed, which areas will be prioritised, what will be the overall effects on the economy, how it will be funded, and a number of other questions. Here, only an outline of the first question is addressed, what is the scale of the investment needed? Continue reading

Demand doesn’t create its own supply – a national investment bank is needed

investment, pic by 123rf.comThe second [pillar of my leadership] is a new economy that puts public investment front and centre stage: in science, technology and the green industries of the future. Instead of Osborne’s economic house built on sand, our focus will be on the reindustrialisation of Britain for the digital age, driven by a national investment bank as a motor of modernisation – and sustainable growth that will slash the welfare bill in the process”

So says Jeremy Corbyn writing in the Guardian. The economic policies of John McDonnell and Jeremy Corbyn are blowing away some of the accumulated cobwebs of British post-World War II economic policy. Almost literally, they are a breath of fresh air. Continue reading

Extreme? Back to the 80s? How Corbynomics compares with the SDP manifesto

Corbyn SDPJeremy Corbyn’s economic programme may be seen as radical by many today, but economist James Meadway finds it has a surprising amount in common with the 1983 SDP manifesto

There’s been a lot of excitable chatter about Jeremy Corbyn’s economic policies. Newspaper pundits and Labour Party grandees have queued up to denounce his plans as a return to the dark days of 1983. This is the year Labour stood in the election on a left-wing platform, and lost by a landslide to the Tories, led by Margaret Thatcher.

The talking heads have a point. Jeremy Corbyn’s manifesto is close to one of those from that fateful year. But it’s not Labour’s. It’s the Social Democratic Party. Continue reading

Deliberately engineered ignorance on the economy undermines Britain’s democracy

Its the economy stupidAs with most elections, the Clinton dictum that “it’s the economy, stupid,” has held good in the general election of 2015 – with special emphasis this time on “stupid”.

The debate about who has done or will do best in managing the economy has been even more confused and irrational than usual this time. It is often the case that “the economy” means something quite different to the voters than it does to those contesting for power. For the voters, it simply means whether they have jobs, or feel better off today than they did yesterday. Arguments over the interpretation of longer-term economic trends leave them largely unmoved. And the more bitter and divergent those arguments, and the more they depend on either side on disputed facts, the less willing and able the voters are to get involved. Continue reading