Growing ourselves out of a hole
There is no better way to get yourself out of the kind of hole we find ourselves in today than to grow your way out.
All the emphasis to date has been on the debt which hangs round our neck like an albatross. But while it was right to worry about this and to take measures to bring it under control, now we must get an engine fired up whose sole purpose is growth.
Where can this growth come from? It is easier first to identify areas where it cannot and should not come from; namely the self-indulgent areas such as we had known for the decade before the credit crunch hit us in 2008.
More than any other sector, the construction industry has taken the brunt of the recession. Once, it was commonplace to see giant cranes at work in every city centre, out of town shopping development and business park. Not anymore.
All is quiet on the Western Front, yet at the same time we have a crisis in housing. Millions of newcomers have flooded into our country and they all need accommodation. And while this moribund industry is virtually at a standstill, millions of our young people cannot get on to the housing ladder because prices are still too high.
Nothing is more likely to bring these prices down than a massive programme of building which closes the gap between supply and demand.
More housing means more carpets to be fitted; more furniture and electrical appliances to be bought; more soft furnishings; more blinds; more kitchen utensils; more visits to DIY stores – the list goes on and on. So here is one area crying out for a massive growth strategy.
With interest rates at an historic low there was never a better time to take out a mortgage, if only the product was there at an affordable price.
What about infrastructure projects to which we are already committed? Surely these could be fast-tracked. The Olympic project has shown us what can be slung up in a remarkably short time frame.
And then there’s Boris Johnson’s pet project: the Thames Estuary Airport to complement Heathrow. The estuary project would not only send a powerful signal to the world that Britain is determined to get ahead of the curve business-wise and continue to host the world’s number one airport; it would also be a faith restoring project as well as, hopefully, the world’s most exciting and, perhaps even beautiful, airport. Even the green lobby would have to have all its boxes ticked.
In our efforts to get energy prices down – a very necessary prerequisite for growth – why don’t we and the rest of the struggling West release a large part of those strategic reserves of oil we all built up to fight the Cold War in the event that it became hot? And why, for that matter, are we pussyfooting about getting up the massive reserves of oil which lie all around the Falkland Islands? At a stroke it would make us oil self-sufficient and even allow us to make the European Union independent of Russian or any other single country’s oil. Imagine what clout that would give us in Brussels!
We could set up ‘Enterprise Zones’ in depressed areas with special tax breaks. There could also be NI exemptions for new start-ups as well as firms employing fewer than 50 who take on new employees.
Yet underpinning it all should be massive, irresistible pressure on the banks to make it all possible. And funnily enough, quite apart from the massive liquidity injected into the banking sector via quantitative easing (money printing), Britain’s big and medium-sized companies are sitting on a huge stash of cash, too frightened to spend it. Rather than wasting political capital debating House of Lords reform or gay marriage, the government must develop a more coherent business strategy to inspire confidence in the business community.
With the pound so much more competitive than before the crisis and historically low interest rates provided by our recapitalised banks, we are in so much better a place than our continental rivals who have yet to bite this most difficult of bullets. Altogether we have very much going for us, if only we could be brought to see it.
Growth can also come from the world beyond Europe which occupies 60% of our export market – some of which in the developing world is not in recession at all. In this regard we have a competitive advantage since much of what we have kept of our once mighty industrial capacity is now at the cutting edge – and consequently difficult for foreigners to poach – such as Rolls Royce aeroplane engines and other high-tech earners such as our renowned computer software sector.
While we do not exercise that hard power that we once deployed around the world any longer, we still deploy plenty of soft power. We punch far above our weight everywhere.
There is a huge amount of warmth and goodwill to be found towards us in the world. You have only to look at that great gathering of the Commonwealth of Nations every four years to see that. Nowadays you even have countries which were never part of the empire applying to join the grouping.
I do not see it as fanciful that one day Uncle Sam himself will wonder why he has not re-joined his original family. Perhaps there is some truth in what George Santayana, the famous Spanish-born American philosopher, poet, and humanist, said when he opined in the nineteenth century: ‘Never since the heroic days of Greece was the world ruled by such a sweet, just, boyish master’.
We are mad not to capitalise on all this. And the wheels have been greased for us by the world choosing to speak our language before any other. We don’t even have to take an interpreter with us.
Posted on May 31, 2012, in financial crisis, politics, UK and tagged commonwealth, Commonwealth of Nations, construction industry, Falkland Islands, George Santaya, Thames Estuary Airport. Bookmark the permalink. Leave a comment.