Posts Tagged ‘uk’


The UK’s productivity puzzle

January 24, 2014

This was originally published on the NEF blog at:

You might have missed the ONS’ latest estimates for UK productivity – they crept out late last year on Christmas Eve. They tell a familiar but not especially pretty story: output per hour worked fell by 0.3% over the middle part of 2013. In production industries, it’s down 1.2%. This means whatever economic growth occurred over the last year was not the result of people working better, or more efficiently. It was the result of an increase in the total number of hours worked. Productivity, over the whole year, barely improved.

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Don’t believe the hype – this is a bubble, not a boom

August 15, 2013

This originally appeared on the NEF blog at

I think it was one of the first pieces to express some cynicism about the brave talk of a “boom” that suddenly appeared everywhere last summer. Subsequent events tend to confirm the analysis given here. 

Happy days are here again, if you read the right papers. UK output grew by a mighty 0.6% between April and June this year, on top of 0.2% growth in the three months before that. “BOOMING BRITAIN HAS WOW FACTOR” boasted London’s Evening Standard.

Don’t believe the hype. This isn’t a boom. It’s barely even a convincing recovery. Only after years of stagnation, aided and abetted by George Osborne’s austerity policies, is it possible to present these feeble growth figures as something to boast about. The IMF now forecasts 0.9% growth for the year. That’s a third of the rate of the early 2000s. The economy is limping when we would normally expect it to be sprinting.

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Tony von Hayek and Gordon Friedman

July 15, 2009

Potlatch on New Labour’s sterling defence of inequality:

It’s clear in the political writings of Hayek and Milton Friedman that economic inequality is the guarantor of social and political difference. Far from the state being tasked with reducing it, the state has an obligation to defend and construct the mechanisms which produce it.

It is without any sarcasm that New Labour ought to be recognised for its achievements in this regard. It has defended free markets, competition in education, the valorisation of sporting achievement, the optimisation of London relative to the rest of the UK, and so on. Forget the filthy rich or David Beckham for a moment. New Labour has done an excellent job in defending the legacy of Hayek and Friedman, who at least had the self-awareness and courage to say what they believed in. Either we live in a society where the wheat is distinct from the chaff, or we live in one of potential tyranny; that was the original neo-liberal claim.

It’s interesting to speculate that New Labour was a far more able defender of the neoliberal project than the Tories ever could be. They were able to do something that Thatcher and Major never did: persuade large numbers of people that, even if they did not like free markets, the worship of the rich, and inequality on a spectacular scale, there was little fundamental that could be done about it. This bitter pill could be sweetened a little by making some efforts at reducing poverty – hardly a radical anti-neoliberal claim, given (for example) Milton Friedman’s own support for a minimum income guarrantee.

And New Labour have (or perhaps had) their own little claque of cheerleaders and defenders who convinced themselves that the existence of free markets could be squared with the existence of social justice, conventionally defined.

New Labour’s crisis is so deep precisely because it has now dramatically and visibly failed on both halves of that equation: it can neither defend free markets effectively, nor can it deliver justice.


The rift reopens

June 24, 2009

This is, in passing, another indicator that the economic crisis is far from resolved – and continues to produce sharp political disagreements:

Appearing before MPs at the Treasury select committee this afternoon, King rejected the chancellor’s budget forecasts, laid out in April, as too unambitious, saying that if the economy recovers as rapidly as Darling expects, the Treasury should act more urgently to bring borrowing down.

“We are confronted with a situation where the scale of deficits is truly extraordinary. This reflects the scale of the global downturn, but it also reflects the fact that we came into this crisis with fiscal policy on a path that wasn’t sustainable and a correction was needed,” he said.

Now King and Darling have squabbled before: the Treasury taking a broadly “Keynesian” line  (maintain spending, print  money) and the Bank, true to form, sticking to its 1930s role as keeper of the Fiscal Orthodoxy: hammer spending, avoid printing money. Last time round, the Treasury won out: Darling pushed King and co back into their box, borrowing continued to rise, and the Bank of England was pushed into “quantitative easing”.

Given all the recent – and basically hopelessly optimistic – talk of “green shoots”, you might expect this political row would be contained. Far from it. It’s a measure of how severely screwed the British economy is, and how little anyone running the thing has a clue how to deal with it, that once more King is taking up  cudgels against the Government. (Of course, the risk with having a much-proclaimed “independent” Bank of England is that they may display some independence on occasion… but presumably Brown knew that, back in 1997.)

But the nearest available political alternative – George Osborne in No.11, a truly awesome thought – is hardly likely to inspire confidence, as S&P’s re-rating of the UK’s creditworthiness made horribly clear.

No, we’re screwed; shit creek minus paddle, with two different captains squabbling over the tiller. Time, perhaps, for a mutiny?