Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. What should one hope for from chancellor John Healey’s Budget? A simple answer is that the world has to believe that the UK is securely in the hands of grown-ups.
Yet, perhaps naively, I hope for rather more: the UK desperately needs a coherent economic strategy. As I argued last week,nostalgia for the pre-Thatcher past is not such a strategy. So, what might a sensible approach look like?
A starting point must be with the constraints. Two — one domestic, the other international — are fundamental. The domestic constraint is the ageing of the UK’s population, which hostility to immigration will tend to exacerbate.
Other things equal, this is likely to ensure rising pressure on public spending and the public finances, as well as slow economic growth per head. My colleague Tej Parikh noted this in “Britain needs ‘chainsaw economics’”, notably the prospect of rising fiscal deficits and debt over the long run given current policies. The international constraint derives from a profound transformation in global politics towards greater friction.
Among other things, the big powers are behaving more erratically and, at worst, weaponising dependence upon them. Yet it is worse even than that: the UK’s neighbourhood is also more threatening than it was two decades or so ago. In her “capping paper” for the Heywood Fellowship, Jenny Bates defines part of the needed response to such realities as “Building Secure Openness”.
For the UK, there is no alternative: autarky is infeasible. It demands thinking about risks and how to manage them far more systematically than in the past, on one’s own or in partnership with others. This is true for business as well as government.
Extract — continue reading at the source.
