In the News

UK Economy - Taxes and Investment and what future for Four-Day Working Weeks?

Graham Watson

20th September 2022

Here is a short round up of some important coverage of topical issues in the press over the last few days.

Britain's low investment record

Aside from all the 'noise' about tax cuts the Institute for Public Policy Research has revealed that despite cuts to corporation tax, Britain's investment is now the lowest of all G7 member states. Despite a fall in corporation tax from 30% in 2007 to 19% in 2019, the UK's level of investment as a share of national income is lower than any other G7 nation.

And there's the rub...this supply-side issue, a long-term, structural factor is probably more responsible for sluggish growth than any of the other factors currently being singled out.

Could a 4-day working week alleviate the cost-of-living crisis?

An interesting solution to the cost of living crisis has been suggested by left-wing thinktank Autonomy. A four-day week, with no loss of pay. They argue that not only would it reduce childcare and commuting costs but it might also help boost productivity. This sort of thing comes at a time when a number of employers have been trialling a four-day week, with many of them seemingly likely to continue with it.

Larry Elliot on the upcoming Bank of England interest rate decision

Larry Elliott sets out the week ahead - the latest MPC interest rate decision and, subsequently, the mini-Budget being delivered by Kwasi Kwarteng. Both promise to be worth watching!

However, for all the tax about the need to reinvigorate growth - and you'd have to worry if Liz Truss thinks that she's the person to do this - Elliott's point is a fairly fundamental one. For all the talk of deregulation, the UK is already relatively deregulated to many of our trading partners. Thus, it may well be that the real issue holding back growth is much more fundamental - a lack of investment, and, a lack of supply-side capacity. This has been something that has been a feature of my now 28 year teaching career, and no-ones been able to find an obvious solution.

And perhaps economic theory can explain why: the payoff to meaningful supply-side reform is such that short-term, careerist politicians have little incentive to implement it.

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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