Britain still needs a focus on growth

German chancellor Olaf Scholz has issued a stark warning about his country’s economic fortunes, warning that Germany is blighted by “bureaucracy, risk aversion and despondency”. In Britain, a little over a year since Liz Truss took office as prime minister saying much the same about our own economic prospects, we remain in the mire. It is not fashionable to credit Ms Truss with getting a great deal right, but her call to focus once again on economic growth remains timely. 

Although upward revisions to official data have brightened the picture somewhat, our economic performance is underwhelming at best. Planning and environmental red tape choke off attempts to build housing and infrastructure, the public sector proves stubbornly resistant to measures to improve productivity, and the tax burden, set to reach its highest level since the Second World War, is now crushing.

While tax cuts may not always pay for themselves by raising government revenue, they do stimulate economic activity. Ms Truss’s efforts to boost growth lacked in execution, but she was correct in her identification of the issues afflicting Britain.

Her great error was in attempting to cut the tax burden without addressing the root cause; the ever-expanding state. In the energy bills bailout and increases in welfare payments, Ms Truss went too easily with the fiscal current and so, in effect, damned her premiership.

Some of her critics, however, have not been fully honest in their assessment of her failures. Too many effectively admit the need for growth without accepting the changes that are required to actively achieve it. While very few politicians would describe themselves as part of the anti-growth coalition, many are implicitly members nonetheless, standing four-square against attempts to boost building, shrink the state, or cut red tape. 

As Rishi Sunak seeks a formula to revive Britain’s economic fortunes and his own electoral prospects, he could do worse than salvage from the Truss agenda those elements which might be made to work with the sort of careful, technocratic implementation which is his great strength.

A more nuanced approach will be required in order to avoid further unrest in bond markets, but something must be done to free the private sector from the burden of the state before Britain finds itself sleepwalking into irrevocable decline – and the Conservatives into defeat.