Creating the conditions for growth

22 April 2016

Despite the relatively steady growth of the British economy since the financial crisis, there are still real economic challenges facing the country. Interest rates remain at unusual and historic lows and real-terms wages are still far below their peak in 2009. Government Ministers have recognised the problem of low productivity. Yesterday, Reform hosted a roundtable with the Shadow Chief Secretary to the Treasury, Seema Malhotra MP, on the title: “Creating the conditions for growth: how can government best support British business?”

Investment will flow when policy is stable and predictable. The Government has introduced the National Infrastructure Commission, an idea originally put forward by the Labour Party in Opposition, to deliver “long term strategic decision making”. Previous Reform work has suggested that private sector financing for energy, transport and public services will be unlocked when policy frameworks are clearer and less subject to change. Before the last Election, the Institute for Fiscal Studies called for clearer and more consistent policy on taxation.

Politicians and business leaders should work together in partnership. The growing role of private sector non-executive directors on departmental boards has been a welcome development.

Many businesses are conscious of the increasing costs faced by their employees, in particular childcare and housing. Both Government and Opposition are developing new ideas in these areas.

Improving productivity remains the underlying question. Much of Reform’s work deals with understanding and increasing productivity in the 20 per cent of economy directly consumed by the public sector.  Improving the performance and value of public services will be of direct benefits to businesses as well as to the rest of society and to the taxpayer.

Emilie Sundorph, Research Assistant, Reform.

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