The former Brexit chief chooses to ignore Britain's productivity crisis
The way forward that he advocates is in fact back to the 1980s and the Thatcherite golden age: “We need to get the country going economically again and that means free markets, free debate and low taxes.”
He’s certainly right that we need to get the economy going again, but as part of the “free debate” about that, I wonder if he has any explanation for this:
The UK's productivity performance between 2010 & 2019 in international context: in the OECD, only Greece & Italy did worse. pic.twitter.com/dvGNcBraPr
— Richard Jones (@RichardALJones) January 7, 2022
It’s a chart tweeted out by Professor Richard Jones — a scientist and expert on innovation policy, whose work has influenced Dominic Cummings among others. What it shows is that the UK has suffered a productivity crisis. From 2010 to 2019 only two OECD nations have done less than Britain to boost labour productivity — Italy and the special case of Greece (which had an economic meltdown during the Eurozone crisis).
It’s an abysmal record, and if we’re serious about turbo-charging our economy then this is where we need to start. Furthermore, if free market Right-wingers want to us to follow their prescriptions, then they need to explain why less economically-liberal economies like France and Germany have managed to out-perform us.
Frost also criticises the UK government’s net zero policies — an attack amplified in an op-ed from Andrew Neil, also in the Mail on Sunday. But investment in clean technology doesn’t seem to have done super-green Denmark — close to the top of the productivity league table — much harm.
In fact, the Danes are only beaten by two countries: Ireland and South Korea. The Irish model can be dismissed because the Republic’s GDP figures have been distorted by tax avoidance schemes. The Koreans, meanwhile, have benefited from an ambitious, hi-tech industrial policy.
As Ben Houchen — the Conservative mayor of Teesside — argues in a piece for The Times today, the new Tory voters of the North and Midlands want to see that sort of ambition from the British government. Therefore, Boris Johnson and Rishi Sunak have a big decision to make: whether to prioritise tax cuts or the strategic investments of the levelling-up agenda.
Of course, what Lord Frost and his allies would argue is that lower taxes and reduced regulation is how we create the conditions for wage-boosting investment. But if that’s true, then why hasn’t the UK’s liberal economic model solved our productivity crisis?