The last thing we need from Wednesday’s spring statement are incremental changes to tax and spending. Let’s have a clear plan
- Jagjit Chadha is professor of economics at Cambridge University and a former academic adviser to HM Treasury, the Bank of England and the Treasury select committee
Britain has a severe problem with its sluggish rate of growth. And while Labour wishes to tackle it, it is going about it the wrong way. The trend rate of economic growth has been successively revised down to just over 1%, which is less than half of our postwar norm. Twice-yearly incremental changes to tax and spending policy – such as the spring statement this Wednesday – will not meet the challenges of stimulating a sustained increase in the growth rate, which requires a significant nurturing of our intellectual and physical capital.
The Bank of England and the government set monetary and fiscal policies respectively, and therefore GDP growth. These institutions, or rather successive bosses of the Treasury, chancellors, must then take much of the direct blame for our stagnation. Policy fails because it is not subject to sufficient timely independent scrutiny. While we are now beginning to understand the errors in policymaking since 2010, a commitment to examine economic performance earlier would help the UK move away from poor policy practice.
Jagjit Chadha is professor of economics at Cambridge University. He was director of the National Institute of Economic and Social Research (NIESR) from 2016-2024 and is a former academic adviser to HM Treasury, the Bank of England and the Treasury select committee