Monday, April 30, 2012
But there is a huge flaw in the Treasury’s briefing and it was astutely drawn to the attention of Scotsman readers last Saturday by Neil Craig in one of his regular and incisive contributions to the letters page. The eurozone, Mr Craig pointed out, accounts for only 40 per cent of UK exports. The rest of the world accounts for the remaining 60 per cent and in that larger fraction economic growth has been averaging a staggering 6 per cent per annum. Singling out the failure of eurozone countries to buy enough of our goods and services just does not paper over the cracks now appearing in the coalition’s previously impregnable defences.And not just that we must but that we can do so.
Two lessons are obvious from Neil Craig’s observation: the first, that the Treasury explanation is insufficient to explain why British economic growth has halted; and the second that if we want economic growth of even just 3 per cent, we must create the economic circumstances closer to those countries outside the eurozone than those in it.
The dilemma for the Europhile British establishment is that the failure of the government to liberalise the British economy and create enough financial incentives for us to attract greater investment goes hand-in-hand with our close association with the eurozone and the smothering directives of the EU.
I don't think I have seen the enormous value of UKIP's policy of quitting the EU better delineated. Brian then goes on to say that the impending triumph of the "left" in France, committed to ever more spending as way of faking economic growth will either, if there is an early election, risk convincing the British people we need the same and to vote Labour back in, or, when it leads to a French collapse, discredit such an option.
Such possible conflicts will give Cameron an opportunity to hold out for a gradually looser relationship with the EU. If he looks at the figures Neil Craig has reminded us about, he will see the sense of reducing the UK’s fixation with European trade. Whether he will be given that opportunity now lies, ironically, in the hands of the French public casting Sarkozy into the wilderness rather than anything he or the British public can do.
I would emphasise that it is not merely trading with the non-EU part of the world we should encourage but adopting the economic policies of those countries which are most successful. So often the BBC etc choose to look at what Germany and Scandinavia are doing and say we should follow that, while the more radical look at the USA. But even the USA is well below the world average. If we analyse what the most successful countries have in common it is a low and reducing level of state parasitism, both in taxation and regulation.Not zero state intervention - but encouragement of transport and technological improvement, including commercial space, rather than our own promotion of Luddism.
History shows that the richest countries have historically tended to grow faster than the poorer, at least for the last 250 years. This is what we would expect if technology is still on a rising curve. In which case, Britain could not only get into fast growth in days but at the top of the growth list if our government wished it. Which brings me back to my programme for growth.