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The consequences of very slow economic growth and stagnant incomes are not, however, problems that impact solely on the UK from a domestic perspective. There are huge international ramifications too. The UK may be dawdling along, growing at 1.5 per cent per annum, but this is not what is happening in China, India, Singapore and many other countries, large and small. The recent average annual increase in GDP in these countries  has been around 5 per cent. A difference of 3.5 per cent a year cumulates to 41 per cent in 10 years and 136 per cent in 25 years’ time. If things continue as they are, between 2018 and 2030, median Chinese earnings are likely to have grown by about 90 per cent while ours may not have moved up at all. What is this going to do for the reputation and support for liberal democracy, the rule of law and Western values, compared to the more authoritarian regimes in most of the East?

Remedies abound. The Right puts its faith in privatisation, deregulation, lower taxes and a smaller state. The Left favours industrial strategies involving better education and training, easier finance for industry, more expenditure on infrastructure and less short-termism. There is little sign that any of these policies, on their own, would do much to help. What we need is a big debate on what would work. What would move the dial, lifting the UK’s growth rate to perhaps 3.5 per cent per annum on a sustainable basis while unwinding all the major imbalances which everyone agrees are holding us back?

Here is an opening contribution to the debate. It starts from the proposition that the root cause of the UK’s problems is that the economy is deeply uncompetitive. We do well on export of services, on which we have an annual surplus of around £80 billion but dismally badly on goods, with a deficit of around £120 billion a year.

The solution is to make our manufactures much more competitive. To do this we need an exchange rate low enough — probably around parity with the US dollar — to make it profitable to invest in new manufacturing capacity in the UK rather than in China or Germany — taking a leaf out their books, incidentally, because this is exactly what they do. Our target should be to shift the proportion of GDP which we spend on manufacturing up from 16 per cent to somewhere near the 26 per cent world average over, say, a five-year period. Since it is in light industry more than anywhere else in the economy that productivity increases are easiest to secure, this is what would push up our growth rate.

If we could get manufacturing as a percentage of GDP up from 10 per cent to 15 per cent, and our exports rose pro rata, this would come close to eliminating our balance of payments deficit and thus government borrowing, because one is to a large extent the mirror of the other. Using exports, import saving and investment to drive demand would make quantitative easing and other forms of ever-increasing debt unnecessary. This mix of policies would not only raise almost everyone’s real wages, it would also reduce regional and inter-generational inequalities and perhaps to income and wealth disparities as well.

It can’t be true that some economies are bound to fail whatever they do while others are always going to be successful. It is the way they are managed which makes the difference. We urgently need a debate on what the elixir we need might be.
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