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|Michael Kitson of Cambridge Judge Business School comments on today’s UK budget|
|Thursday, 09 March 2017|
Michael Kitson, University Senior Lecturer in International Macroeconomics at Cambridge Judge Business School, commented today in The Conversation on the budget by UK Chancellor of the Exchequer Philip Hammond.
Michael Kitson said:
The chancellor delivered an upbeat assessment of the economy – upbeat but rose-tinted. The economy is currently being sustained by debt-driven consumption and a low exchange rate, and Hammond has done little to address the long-term challenges.
We were given another glimpse of the chancellor’s actuarial tendencies as he repeated the favoured mantra of his predecessor that he will “not saddle our children with ever-increasing debts”. However, what the country needs is an entrepreneurial chancellor who will invest to ensure our children inherit a prosperous economy.
On the plus side, Hammond has announced some modest investment in technical and vocational training with the introduction of T levels, combined with a hotchpotch of piecemeal initiatives to conceal the lack of a strategy. But there are important areas that were largely ignored. First, how is the economy going to develop robust trade links outside of the single market? Things may look rosy at the moment because of low exchange rate, but this is not sustainable.
Second, the British economy’s long-term record on investment has been poor and is likely to deteriorate if overseas companies decide that the UK is a less attractive option outside the EU. Offering subsidies and other sweeteners is not a coherent industrial policy. Innovation is one of the key mainsprings for long-term growth, but this requires companies to invest in the UK and for the economy to be open to talent from all countries.
The rhetoric was strong and the jokes were feeble. What was required – and what was lacking – was a long-term plan on how to deal with the challenges ahead.
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