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Last weekend, when Rachel Reeves visited China to boost business for Britain, Conservative MP Tom Tugendhat wrote that Taiwan would make a better economic partner. With only 2,500 words left in the Times, he decided the following fact was left unmentioned. The Taiwan Annual to go out or 800 billion dollars. China is 19 trillion dollars. Tugendhat, a good man, but also proof of how far a pukka accent and background can take an empty ship on the lifeless sea of British public life, is not alone. Many Conservatives want the UK to keep China at bay. There are security arguments for this. But why dress it up with economy? Why not just admit that growth isn’t that important to them?
Britain’s problem is that almost everyone sees growth as their priority, and almost no one actually thinks so. There is always another consideration that takes precedence, whether geopolitical, ecological, cultural or egalitarian. The result is the worst of all worlds: no serious desire for economic success, but also no tacit national agreement that we should lull ourselves into a life of drama-free stagnation. Either solution would be an adult choice, with its own benefits and costs. It is the fudge – which sees growth as desirable in the abstract but in no specific form – that has Britain in its gelatinous grip.
A thousand editorials will tell you that Britain has no ‘growth strategy’. If that means policies, then Britain lacks no such thing, and almost never has. What is missing might be better called a “growth preference”: a well-established view that when growth conflicts with another goal, growth should prevail.
Let me approach the subject from another angle. What has been the American growth strategy over the last two decades? Under which administration was it published? Can anyone send me a link? Every time I ask these questions of “strategists”, the best answer I get is a vague bluff about Darpa’s role. Ultimately, the most successful economy of all had no plan. What he did have, besides shale and other advantages, was an extremely strong preference for growth. When growth collided with another imperative—tax cuts versus income equality, corporate expansion versus antitrust concerns, fracking versus local sensitivities—the American bias was in favor of growth, at least compared to the Western European average. A culture that doesn’t expect much like legal paid leave can make dynamic choices that Britain can’t or won’t.
This week, Sir Keir Starmer outlined a plan to harness artificial intelligence to enrich the UK. The moment it became clear he wasn’t serious was when he said he would make AI “work for everyone“. Almost no worthwhile government reform works for everyone. His line practically concedes that once AI upsets an interest group, it is likely to relent.
If AI is half as transformative as the hype suggests, it means job losses in the public sector: in the diagnostic phase of healthcare, for example. Unions want economic growth. But not that much. AI also has colossal energy requirements. Even with current levels of electricity consumption, the government’s goal of decarbonizing the grid by 2030 is far from achievable. To meet new data center demand, these goals may have to be abandoned. Sensible environmentalists want growth. But not that much.
If Britain wants to attract top AI talent, it may need to cut taxes on high incomes or capital gains. As soon as Starmer approaches this idea, a think tank like the Resolution Foundation will hound him into submission with graphs of the effect on inequality. When given the choice between being a social democracy with 1.5 percent annual growth or a more stratified nation with 3 percent, some choose the former. They want growth. But no. . .
There is another way. Britain could end its growth policy. I would hate it, but there would be no shame if politicians came to the following intellectual settlement. The high growth rate before 2007 was an aberration, not the low rate since then. Returning to this trend is feasible, but the necessary reforms in unemployment benefits, etc., would cause social discord on which potential growth would have to be offset. Ultimately, Britain is not America. This is France: a “poor and rich nation” whose huge, disproportionate capital and flair for Stem subjects cover a multitude of cracks. Ideal? No, but what model is it? Economic success hasn’t stopped the United States from having the worst policies in the free world.
Or Britain could continue the current charade. Conservatives want growth, but not if it means building things, aligning with Europe, or getting a lot of exposure to China. Labor wants growth, but not if it inconveniences unions, or if it “leaves people behind” or if such a press statement from an NGO is nonsense. What growth policy remains then? A finance minister asks her colleagues to suggest cutting red tape. It would be stupid to even talk about firing Reeves. Yes, she chose to learn the hard way what was clear all along: that calling spending “investment” doesn’t mislead real investors; that “austerity” is not the problem in a country that has not achieved a budget surplus since the millennium. But Britain has no problem with Reeves. There is a problem with Great Britain. Basically, we are more satisfied with annual growth of 1.5 percent than we dare to let on.
janan.ganesh@ft.com
