Theory and reality

From an editorial comment in London's Evening Standard (link is here):

THE media concentration on the tiny movement in quarterly growth figures is intellectual nonsense — for one thing, the numbers remain prone to revision. Almost none of the slow growth is down to "austerity" because the volume of government consumption has increased way beyond official intentions, albeit through poor control rather than overt intent.

I suspect the three main causes of weak growth are Osborne's many misguided tax increases, particularly in 2010, weak demand in our European export markets and a sluggish growth of broad money and credit caused by over-zealous regulation. Demand from EU markets is weakening further and we can only hope for no more adverse shocks from the other two factors. However, that is up to the politicians. Prof David B Smith THE Chancellor's economic policies were never going to work since he has failed to address our hopelessly uncompetitive export prices — almost entirely an exchange rate problem.

Worse, on the evidence of Commons debates hardly anyone in politics seems much concerned about it.

Even at $1.50 to the pound, it still costs far more to manufacture almost anything in the UK compared with the Far East. To regain enough competitiveness to pay our way in the world we need an exchange rate of not much more than £1.00 = $1.00. Until we wake up to this we face years of pointless austerity, low growth, high unemployment, increasing inequality and relative national decline. Why are we allowing our economy to be run so badly? John Mills, JML Group NOWHERE are things worse than in the construction industry, which is at its lowest ebb since 1999. Construction is one of the most effective sectors in which to invest. The wide, varied and substantially UK-based supply chain means that every £1 spent delivers £2.84 in economic output. But there has been a real reluctance to invest. Promised spending has been continually deferred or, like HS2, is so far away as to have little or no impact on the present malaise.

We're told there's no money left and that we have to clear the public debt. But this is an increasingly untenable line to take. Government can borrow money more cheaply than it has ever been able to. High levels of public debt are nothing new — the national debt is at a lower level than it has been for most of the past century.

We need new and improved roads, schools, infrastructure, and most of all, housing. If we boost construction, it will help other sectors in turn and push overall growth up.

Chris Hallam, partner, Pinsent Masons Infrastructure Projects Group GEORGE Osborne claims the economy is now "healing". I must say, I hadn't noticed any evidence of this, but I'm sure it won't be long now — after all, it seems to have mastered playing dead. Julian Self Almost none of the slow growth is down to "austerity" because the volume of government consumption has increased way beyond official intentions Prof David B Smith

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