“We are living in unprecedented times, but all times are unprecedented. The mini-budget may seem like a return to the past, or perhaps it is a tabula rasa moment in which the UK government tries to transform the wider framework conditions that underpin wealth creation and economic growth across the UK. Trickle down approaches to managing economies are well-tested, but perhaps the challenge is their implementation. The key issue is to ensure enhanced wealth creation or employment creation opportunities. But, there is a problem in the UK and this is that there is near full employment. There are major problems with hard-to-fill vacancies and skill deficiencies. Any new job creation activities need to go hand-in-hand with solutions to labour market shortages and skill deficiencies.
“Enterprise zones and low-tax investment zones are well known policy solutions that have been applied in many countries. These take many forms. One could argue that the need for low-tax zones represents place-based patches to wider problems in the UK economy. A well-managed national economy should not need to establish low-tax zones. The key is to ensure that national policies and regulations are supportive of business investment that results in job creation and not labour exploitation. The focus should be on inclusive economic growth rather than on highly targeted place-based and isolated economic growth hot spots. A key issue with low-tax zones is ensuring that they create new wealth and employment opportunities rather than pulling existing activities into the zone from elsewhere in the UK. These zones must demonstrate real additionality.
“I am not in favour of reducing National Insurance rates, as this increase was designed to be a long-term solution to the UK’s social care crisis. The increase in NI rates would also temper economic growth and result in similar outcomes to an increase in interest rates. Whatever happens the UK does need a long-term solution to the key societal challenges that are facing this nation and these revolve around education, skills, climate change and decarbonisation, responsible and inclusive job creation and health and social care. Underpinning this needs to be a concern with a sustainable and responsible approach to the management of national finances.”
Professor John Bryson, Chair in Enterprise and Economic Geography at the University of Birmingham