Politics

We cannot regulate our way to growth

philmullan Economic growth, Economic policy, Politics, State intervention

Even before this week’s bond market turmoil, the newish Labour government tacitly acknowledged that not all was going to plan, with the economy continuing to stagnate. Over the Christmas period, in an apparent act of desperation, UK prime minister Keir Starmer, chancellor Rachel Reeves and business secretary Jonathan Reynolds wrote a letter to the UK’s biggest regulators to ask for help with its growth plan. Regulatory bodies such as energy watchdog Ofgem, water regulator Ofwat, the Environment Agency and the Financial Conduct Authority were urged by the government to submit proposals on how best to boost the economy.

Of course, government ministers should always be engaging with their functionaries for advice. But to openly admit they have had to beseech them for help to meet their central policy commitment of ‘growth, growth, growth’ was an extraordinary testament to Labour’s lack of ideas.

We shouldn’t hold our breath waiting for Starmer’s administration to deliver on his pledge to get rid of regulation ‘where it is needlessly holding back the investment we need to take our country forward’. The reality is that his government, like its predecessors, will only add more to the regulatory burden. Indeed, Labour’s manifesto explicitly promised tougher systems of regulation on a huge spread of businesses.

Read the full article here.

‘More EU’ won’t save Europe’s economy

philmullan Creative destruction, European Union, Politics, State intervention, Zombie economy

Mario Draghi’s report on the future of European competitiveness, published last month may present itself as a sober economic analysis, complete with proposed policy solutions. But this report – commissioned by the EU and produced by a former head of the European Central Bank – is best understood as a political manifesto for an ever-closer EU, controlled from Brussels.

His report is chiefly concerned with ‘strengthening governance’ – a euphemism for the extension of the European Commission’s power. Stronger governance, he writes, ‘means “more Europe” where it really matters’. And this means less national sovereignty where it really matters, too.

Read the full article here.

Unshackling Europe’s Economy: what holds us back?

philmullan Creative destruction, European Union, Politics, Productivity, State intervention

Here is a video of the talk I gave at the conference ‘Unshackling Europe’s Economy: what holds us back?’, organised by MCC Brussels on 24 September 2024.

My talk critiqued Mario Draghi’s recent report, The future of European competitiveness – A competitiveness strategy for Europe. I explained that this is not a neutral report on economic policy with new ideas to boost productivity within European countries. Rather it is a political manifesto motivating an ever-closer European Union controlled from Brussels. Europe’s real productivity slump is used as another instance of a ‘crisis’ – in Draghi’s words, an ‘existential challenge’ – in order to justify extending the powers of the EU to the detriment of national sovereignty and decision-making.

An ageing population is nothing to fear

philmullan Demographic change, Economic growth, Politics, Productivity

People are living longer lives than ever before. This ought to be regarded as something to celebrate. Yet for far too many politicians, commentators and academics, the fact we’re living longer than ever is seen as a serious problem – even as a source of despair. Last week, two reports, one on the malfunctioning National Health Service (NHS) and another on the steadily rising public debt, attributed much of the blame for Britain’s woes to our population’s longevity.

But people living longer is neither an obstacle to growth nor an unbearable strain on the public purse. This fatalism is wrong on every level.

Read the full article here.

Does the OBR run this country?

philmullan Democracy, Economic policy, Politics, State intervention , ,

The UK desperately needed something bold and innovative from this week’s spring budget. The nation’s infrastructure is literally crumbling, the energy grid is overloaded and local authorities are going bankrupt. The economy and public services are simply not working.

Of course, it would have been naive in the extreme to expect any answers to these problems from the current moribund Tory government – even as a General Election looms. And, given the UK’s stagnant economy, any chancellor would have struggled to conjure up the resources to fix all of this now in a single budget. Still, chancellor Jeremy Hunt’s budget was a paltry affair, even by his past standards.

Some have blamed the paucity of the chancellor’s budget statement on the Office for Budget Responsibility (OBR), the ‘independent’ watchdog that determines whether the chancellor is sticking to his so-called fiscal rules.

But we should be wary of demonising the messenger. And any suggestion of ‘external’ constraints on the government should be rebuffed, as it lets our elected leaders shirk responsibility for their own decisions.

Read the full article here.