As recess draws to a close, policymakers need to start to tackle the thorny issues that still face our economy.
Apart from the weather, summer has been a time to celebrate some of the successes of Britain – not just in sport but also as an industrial economy. However, today's statistics show the events of summer have not raised consumer confidence as expected and this could be risky as a pick up in consumption is expected provide some moderate support for growth in the second half of this year.
Our summer reading list has discussed some of important issues that will contribute to a resurgence in growth in the short, medium and long term.
- We have discussed the need to stimulate innovation and continue to address the credit constraints businesses face.
- A new model of growth needs to see investment and trade as key drivers – while the trade balance has not been improving, manufacturing investment has picked up in recent quarters and for some time now has been stronger than investment in the wider economy.
- We can also look to other countries that have seen some success in stimulating growth and supporting their productive sectors.
In the upcoming party conferences we want to see a big focus on getting the UK economy growing again with all parties having a clear and concrete commitment to raise growth akin to that of the fiscal mandate.
The coalition has made good inroads into getting the public finances back on track but in the absence of growth will they be able to achieve this goal?
Last week the public finance statistics showed public sector net borrowing, the key measure of the fiscal mandate, had increased in the year to July 2012 to £0.6 billion.
Clearly there is a tension between managing public finances and stimulating growth. But if conditions continue to worsen the government may be in a position where growth continues to lag and as a result are unable to meet the fiscal target.
The debate on our economy needs to change. Keeping our fingers crossed that Europe will sort itself out and economic rebalancing will get back on track isn't a plan for growth. We need to start talking about what is most important for our economy – for us that's the private sector investing, exporting and innovating – and how all parts of government can help companies do it.