A roadmap for economic renewal

There is much talk from inside and outside government about a state-administered ‘reset’ or ‘reboot’ in order to begin Britain’s economic recovery. But the economy needs something much more far-reaching – namely, a bold and comprehensive reconstruction. Ordinary people must take the lead in our post-Covid recovery. Read the full article here.

It’s time to transform the UK economy

It is said that crises provide fertile ground for innovation. This is only partly true. The acute pressures, the falling away of pre-crisis norms and the sidestepping of regulations, liberate individuals and teams of people to come up with great ideas about how to do things differently. This fresh thinking can originate better, more effective and efficient ways of conducting existing productive activity, or it can conceive brand new products or services that improve people’s lives.

Certainly in this pandemic and the lockdown crisis, we have already seen lots of inventive deliberation.  But where the saying falls short is that devising creative ideas is not enough for innovation. Innovation represents the implementation of that creativity for social benefit. While crises can be great times for ingenious thought, novel ideas only become innovations when they are applied and are replicated to bring change, improvement and progress to people’s lives.

This conception of innovation brings out the biggest obstacle to seeing much of it happening in the medium-term future. We are not just in a period of crisis, but a crisis within an existing state of economic depression. Depression is not simply an extension to recession, in the way it is being discussed today. It is a protracted phase of economic sclerosis that has become self-reinforcing.

Read the full article here.

The coronavirus cash crunch

The UK Treasury’s number one priority, with support from the Bank of England, must be to get unlimited money swiftly to businesses and individuals who are losing income because of the government’s coronavirus containment measures. This applies both to providing firms with cash to avoid bankruptcy as well as to ensuring that all their staff – employed, self-employed and gig workers – continue to be paid when they go into unpaid quarantine or are laid off either temporarily or permanently.

But however successful the government is in this vital support task, the British economy is already in recession. And the more extensive the lockdowns are, the deeper the immediate falls in economic activity will be. Long before the Covid-19 outbreak many economists had been correctly anticipating another downturn. Britain, like most other advanced industrial countries, has been in a state of precarious sclerosis ever since the stabilisation which followed the financial crisis. Western economies have been producing too little new wealth for decades. They were only functioning as well as they have been by borrowing from the future. Now this precarious, debt-dependent economic life has suffered a sharp and unexpected disruption. The collapse is largely due to a cash crunch.

Read the full article here.

If another crash comes, don’t blame coronavirus

Institutions are starting to draw attention to the potential economic effects of the coronavirus outbreak. However Covid-19 is not the cause of our economic malaise. Forecasters should be careful in presenting new economic releases on coronavirus and now allow this health matter to become an occasion for economic scaremongering.

Playing up the economic costs of Covid-19 could exacerbate fearful responses, as well as distract from the much longer-lasting sources of economic sickliness. Global growth and, especially, advanced-economy growth are already dismal, and have been for many years. Forecasts for this year were already pretty downbeat before most people were aware of the word coronavirus. The danger is that this acute health disease gets blamed for our economic troubles, while the chronic economic disease remains undiagnosed and untreated.

Read the full article here.