Daniel Limpi / EyeEm via Getty Images
The British Chamber of Commerce says the UK economy is “stuck in a rut” because of uncertainty over Brexit. Actually, the truth is that the British economy has been performing poorly for decades. Brexit is not the cause. For the past decade, the average rate of growth of the UK economy has been no more than 1.1% per annum.
But if it’s not Brexit that is causing our slow growth and huge trade deficit, then what is? The truth is that successive governments in the UK, both Labour and Conservative, have decimated our manufacturing heartlands, destroying well-paying, stable jobs. We are, sadly, only now starting to wake up to the long-term consequences.
Nor does it look likely that our performance is going to improve. If we are lucky, we might chalk up an annual growth increase of 1.5%, still far slower than the 3.5% per annum world average. This makes a huge difference. It means that it takes about 50 years for GDP to double with our growth rate compared to 20 years for the rest of the world. With our slow growth most people see no increase in their living standards year after year. Elsewhere, on average, living standards double roughly every generation.
Our politicians have failed to get to grips with this problem because they simply do not understand it. This is made worse by organisations like the British Chamber of Commerce using the figures to grind their own axe, rather than looking for the real explanations of why we are doing so badly.
The standard left-of-centre explanation for our poor performance is that our education and training systems are poor. They also say that banks lend money to the wrong people, the City is too short term, and that we don’t spend enough on R&D. The right-of-centre explanation is that taxation is too high, there is too much regulation, and the state is too big.
My view is that these explanations are both wrong, and the real reason for our slow rate of economic growth is that we invest…