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In the News

UK Economy - Business leaders must innovate again

Graham Watson

11th February 2023

Here is a Larry Elliott article that should be essential reading for everyone taking a post-16 examination this summer about the importance of productivity to helping the British economy out of its current hole.

However, although Brexit has limited our ability to rely on migrant labour and our capacity to exploit cheap workers to be competitive, the issue of our relatively low productivity predates this, something recognised by the article.

The issue is that there isn't an easy solution: it's about boosting pay, adapting to our changed circumstances and re-skilling our workforce, and investing in new capital, and the shame is that we haven't done any of the above for most of the past 50 years.

Phillip Inman assesses here the current state of the UK economy and shares my view that the economy looks like it's going nowhere fast. Yes, we've avoided a recession - for now - but a lack of investment and an export shortfall - both injections, of course, mean that aggregate demand is going to remain moribund.

Are UK interest rates too high now?

It seems as though the Monetary Policy Committee is divided, with one member, Silvana Tenreyro telling the Commons Select Committee that she was of the view that interest rates were currently too high, but the Governor of the Bank of England, Andrew Bailey, telling the same committee session that there were still upside risks to inflation, and seeming to suggest that he was concerned about entrenched inflationary expectations.

That's why the current model of monetary policy formulation is so good: transparency, and, accountability, with markets and the public able to follow the debates within the Bank of England. You might note that I've omitted credibility from the holy trinity of policymaking - that's a deliberate nod to the impact of Trussonomics.

Please read: UK interest rates are too high and may need cut – Bank of England’s Tenreyro

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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