As the UK economy pulled out of recession in 2009, a consensus emerged that we should build a better balanced economy, one built on innovation, investment and trade rather than debt-fuelled consumer spending.
Even then, we knew that rebalancing would be a daunting task, but growing economic challenges – most notably in the Eurozone – have cast a shadow over the UK's recovery.
Though trade figures today point to some improvement, on the whole, progress towards better balanced growth appears to have stalled. The UK's recovery has been more sluggish than in many competitor economies, including some in Europe.
And while the UK economy has significant strengths – in its industrial diversity, innovativeness, and openness – there is something missing in our approach to growth.
The government's plan for growth lacks the clarity and consistency of purpose of the Fiscal Mandate. There are clear targets to get the deficit and debt down, but where are the comparable targets for growth?
But what good is a target? Well, so far the OBR has said that the government is on track to meet its fiscal aims, but when it comes to growth and recovery, this has fallen short of earlier forecasts.
Without an explicit growth strategy, policies can end up pulling in different directions.
- Without an explicit growth strategy reprioritisation of spending will lack focus
- Without an explicit growth strategy actions of individual government departments may be inconsist
- Without an explicit growth strategy there is no accountability if economic performance fails to meet expectations
Our future competitiveness hinges on the decisions we take as an economy now. Government can be a strong collaborative partner with business but it needs to set the course for a rebalanced economy. We need a bold new approach to growth.
EEF's Industrial Strategy: The Route to Growth was published yesterday.