The Need to Deliver Growth Through New Infrastructure
The UK economy’s growth rate has fallen behind other nations since the crash of the financial markets in 2008 and more recently the UK’s forecast growth rate has flatlined. A normal growth rate for a developed economy is in the region of 2-3% per annum and so a good growth rate – which the UK ought to aspire to – would be in the region of 5% or more. China is at 4.5% and India at 6.5% for reference.
Growth matters because it affects our living standards and quality of life; and it provides tax receipts for investment in essential services including police, schools and hospitals. Today living standards in the UK are 23% below those of the USA and the gap continues to widen.
Chancellor Rachel Reeves announced a package of infrastructure projects to stimulate the nation’s economic growth by £78 billion. The plan includes 18 new towns on the Oxford to Cambridge Corridor. One academic study of the interwar years shows that house-building accounted for a third of the period’s economic growth, indicating that the Chancellor’s plans could be on the right track.
Battle lines already are being drawn over some of the growth projects, in particular the new runways and new towns. The global picture indicates intensifying competition from developing nations that are unencumbered by our practice of protracted enquiries and excessive regulation. These economies have better growth rates than the UK’s.
‘Smart’ regulation - necessary, proportionate and speedy - can contribute to creating the right environment for growth – and is vital to protect the environment, safety and health; and also businesses. Similarly, ‘smart growth’ finds the sweet spot that delivers better social, environmental and economic outcomes. The proposals announced by the Chancellor have the potential to do this.
We’re hopeful that AI, with its ability to assess a large amount of complex data and information, will reduce the length and sometimes the subjectivity of regulatory processes, thereby accelerating growth potential and enabling the UK to compete internationally.
