Let's get fiscal
Senior Researcher
The Government have described economic growth as their central and most important mission. Against a backdrop of growing global uncertainty, however, it was a halving of the OBR’s growth forecast for this year — combined with higher interest rate expectations — that eliminated the Chancellor’s headroom and prompted a course correction on Wednesday, including targeted cuts to spending and measures to recover more tax.
Read our Snap Analysis for what we made of those announcements.
Yesterday, we brought together an expert panel to further dissect the OBR’s outlook and future of the public finances, with Richard Hughes, Chair of the OBR; Chris Curtis MP, Co-Chair of the Labour Growth Group; and Dr Linda Yueh, economist and broadcaster.
Here were our main takeaways:
- We should treat uncertainty as a wake-up call for bold action. Even with the positive growth effects of the Government’s housebuilding drive, the OBR still expects growth to remain below 2% for the rest of the Parliament. To secure the investment needed in public services and raise living standards, we must, as Chris Curtis put it, be “as bold and radical as necessary to increase growth”. The only way out of our current bind, which forces a largely reactive approach to fiscal policy, is through sustained, higher rates of economic growth.
- Economic inactivity calls for a new mindset towards ageing and long-term illness. Careers are longer than ever before, and as life expectancy has expanded, so too has the number of people living with (often multiple) long-term conditions. At the same time, the approach of government and employers has not caught up. Both in considering over 50s/60s as an important, generally experienced part of the labour market to attract into work, and in changing the incentives and making the workplace adjustments needed for people with health conditions and disabilities to remain in work.
- This Parliament will be defined by what happens to living standards. Though feeling ‘better off’ is in some ways a subjective measure, the cost of living and real incomes are crucial targets, and should motivate and be embedded in policy development across government. This is about raising productivity, by supporting people into higher-productivity employment; but it is also about ensuring that the fundamentals, of secure housing, affordable food and energy, are within everyone’s reach.