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Onward Note
Britain is 10 years into a low growth trap, facing a recession, approaching an inflationary storm, and no one has a clear economic vision for how to fix it.
Familiar policies have emerged from the Conservative leadership campaign. Tax cuts, free markets, and slashed regulation will – candidates claim – put pounds back in pockets, boost growth and tackle the cost of living.
But most successful economic hubs are competitive on tax and regulation but also make big interventions in infrastructure, R&D and skills. Countries with more spatially balanced economies invest heavily in struggling areas to make sure all their citizens have opportunities.
This recognises where growth comes from in today’s knowledge economy. Across all sectors, successful firms share knowledge between high-skilled workers, who crowd together in cities.
This points to a reimagined role for the state to address market failure – supporting urban densification, bringing together universities and businesses, leveraging government procurement to support industrial strategy, and tackling dominant tech firms to make markets competitive. These are roles only the state can play.
This is the debate the Conservatives should be having. And it can’t wait – on the UK economy’s current growth trajectory, we will be overtaken by Poland in 12 years.
The passive model has vocal advocates, while supporters of a more intentional economic policy are silent, fearful of being dubbed “un-Conservative”.
The madness is that the Conservatives had the beginnings of a more intentional approach to the economy. The Levelling Up White Paper set out the limits of an economic policy that places too much on markets’ ability to generate or distribute growth.
This isn’t just an economic problem – it leaves the government politically vulnerable. The Conservative electoral coalition has a greater tolerance for higher taxes if they mean investment in public services. They want to ban zero hours contracts and improve protections for workers. An electoral pitch based on passive economic policy is a path to defeat in 2024.
Advocates of a more intentional economic approach need to find their voice. Pragmatism is an important Conservative principle and today’s challenges won’t be solved by the state simply stepping back.
Adam Hawksbee
Deputy Director
A longer version of this note appeared in The House on 19th July.
Quick Links
 spectator.co.uk The Conservative leadership contest has descended into a low-tax auction, which is not a good thing. The implication is that the Conservatives think government should be minuscule at the very… |
 economist.com Live by the bank, die by the bank |
 newstatesman.com This narrow binary between glossy, aesthetic photos or TikTok-style video overlooks a crucial, broader change in our digital habits. |
