Douglas Carswell's Blog

It's a lack of competitiveness that's the problem

Last week's trade figures revealed that Britain is currently running one of the largest trade deficits for many years.

What does this tell us? Put simply, we are not producing enough things at a price that the rest of the world is willing to buy.

This is yet more evidence that the root cause of our economic problems is that we are not competitive enough.

All the monetary or fiscal stimulus that we could throw at the domestic economy would do little to tackle this underlying problem. Encouraging yet another dose of excessive consumption, another trip to the shopping mall with the credit cards, another round of asset price inflation, will do nothing to help us earn our way in the world.

Tragically, since the downturn began five years ago, policy makers in the Treasury - under governments of all three parties - have behaved as if the problem is a lack of demand - first in the UK, then in the Eurozone. No wonder we are stuck in a rut.

We ought to be alarmed at the way that Britain's trade position has deteriorated despite having our own currency, which might have helped price us back into world markets.

To me, this suggests that the pre-crunch credit boom masked a deterioration of our competitive position to a far greater extent than the experts yet realise.

It is not simply that we have grown less competitive after years of regulation and red tape. In a truly global economy, the definition of what is competitive has changed. Maybe the high tax / high regulation Western model we take for granted just doesn't work the way it used to any more?

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