Douglas Carswell's Blog

How to fix the economy, minister

It is not about demand.

It is not about demand.

At the risk of repeating myself, our economy is not in this mess principally because of a lack of demand.

Tragically, for Britain - and for themselves - Treasury ministers persist in responding to the economic downturn as though it is all about demand.

Hence their focus on stimulus remedies of one kind or other; Easy credit. Low rates. QE. Credit handouts. �100 billion more spent each year than the Treasury takes in tax.

The stimulus approach has not worked under this administration. It did not work under Gordon Brown. It will not work in future. It will not work because a lack of demand is not the main problem.

Our economy is in this state because we are not competitive. Years of easy credit generated chronic malinvestment, which the political elite mistook for growth. This masked a long term decline in our ability to producing things at a price other folk are willing to pay (Note how tiny Switzerland now sells more to China than we manage to).

Perhaps you still doubt me? Then just look at our sky high energy prices. Or our non-wage labour costs. Ask yourself how many of our global competitors have to carry the costs of a state sector that consumes the equivalent of 50 percent of output?

Fast tracking a few housing developments alone will not address these fundamentals.

Ministers need to ask why we have sky high gas prices while vast reserves of shale gas sit in the ground beneath our feet. Or why entrepreneurs are taxed for creating jobs. Or why nothing has been done to arrest the blizzard of regulations spawned by government agencies.

Why so much crony capitalism, yet too little free market enterprise?

Until these questions are answered, our economy is not going to recover properly.

Back to all posts