Professor John Bryson, Chair of Business and Economic Geography at the University of Birmingham, gave his opinion on the economic measurement announced today by Chancellor Kwasi Kwarteng.
Professor Bryson is an economic geographer whose research focuses on understanding people, organizations and the complex ways in which production is organized by space, place and different forms of enterprise:
“We live in unprecedented times, but all times are unprecedented. The mini-budget may seem like a throwback to the past, or maybe it’s a tabula rasa moment as the UK government tries to transform the broader framework conditions underpinning wealth creation and economic growth in the UK. The trickle down approaches to managing economies have been well tested, but perhaps the challenge is their implementation. The main issue is to provide more opportunities for wealth creation or job creation. But there is a problem in the UK and that is that there is almost full employment. There are major problems with difficult-to-fill vacancies and skills shortages. All new job creation activities must go hand in hand with solutions to labor market and skills shortages.
“Enterprise zones and low-tax investment zones are well-known policy solutions that are applied in many countries. These take many forms. You could argue that the need for low-tax zones represents localized patches for broader problems in the UK economy. A well-run national economy should not be necessary to establish low-tax zones. The key is to ensure that national policies and regulations support business investments that lead to job creation, not labor exploitation. The focus should be on inclusive economic growth rather than on highly targeted, place-based and isolated hotspots for economic growth. A key problem with low-tax zones is ensuring that they create new wealth and employment rather than pulling existing activities into the zone from elsewhere in the UK. These zones must show real additionality.
“I am not in favor of lowering national insurance rates as this increase was intended as a long-term solution to the UK social care crisis. The rise in NI rates would also dampen economic growth and lead to similar results to a rise in interest rates. Whatever happens, the UK needs a long-term solution to the key societal challenges facing this country, which revolve around education, skills, climate change and decarbonisation, responsible and inclusive job creation and health and social care. Underpinning this should be a concern with a sustainable and responsible approach to managing national finances.”