The UK’s Economic Research Council invited me to represent LSE in a panel discussion on near-term prospects for the UK economy. Lord Norman Lamont, 1990-1993 Chancellor of the Exchequer, chaired. The other panelists were Prof John Muellbauer from Oxford and Prof Hashem Pesaran from Cambridge. The venue? The Royal Institution of Great Britain’s Faraday Lecture Theatre, where in 1825 the first of the Royal Institution Christmas Lectures were delivered.
The speaker,
Danny Quah, advised that for whatever reason things have changed and for the UK to survive they must adapt to those changes
How would I propose to change matters? My suggestions at the event were general and therefore impractical. But here they are again:
1. Reboot the UK economy: Take the pain and turn around to engage fully with the emerging economies; do business with them as economic partner — no more, no less. The emerging economies are now the world’s engine of growth: Deal with it.
2. Unleash our universities and other thoughtful, creative industries. This is NOT to raise government spending, but just to free up extant restrictions on their operations. UK higher education is hugely in demand by the emerging economies. If there’s anything that’s going to help re-balance the global economy, this is it.
3. Throw out long-standing aesthetics and principles – they’re also called prejudices. Become enamoured of what works — whether it’s guided capitalism under a bit of state control or anything else we previously thought completely nuts (i.e., outside the Washington Consensus). Celebrate the virtues of working hard, raising productivity, saving for the future — not revile them as many do today for Germany or used to do most obviously recently only for China (and yet might come back to doing so again soon).
