How to grow an economy, Crawley Observer Column, Wednesday 4th February 2025

Listening to politicians, you would think the economy was everything. As the Chair of the Parliamentary Group for Wellbeing Economics, I’m well-aware the evidence proves relationships, meaningful work, and physical activity improve quality of life far more than material wealth. Yet, while this is useful to know to prioritise public expenditure and taking decisions for our own lives, the reality is you can’t do much without money.

Since the 2008 Banking Crisis, we have been plagued with low economic growth. We certainly haven’t helped ourselves, opting for Austerity while other Governments invested in infrastructure resulted in private investment going elsewhere. Brexit extended the economic uncertainty and increased barriers to trade, and  the UK’s approach COVID meant an extraordinary increase in borrowing while shutting down much of the economy, inevitably creating prolonged high inflation.

A return to decent growth rates would reduce the impact of inflation, put more money in people’s pockets, increase tax revenue for public services, and even lower the cost of government borrowing. In short, life would get easier all-round.

Unfortunately, it is a deeply challenging time to attempt to grow an economy. The Russia-Ukraine War has had a lasting effect upon energy prices—both for the UK and our trading partners, the USA’s erratic tariff decisions have created global economic uncertainty and reduced trade activity, and concerns over US public borrowing have the bond markets on edge.

Despite this, there are certainly things which can be done. With the deal announced in China, the Labour Government has now agreed new trade deals involving economies equivalent to 71% of Global GDP. At home, the Government is prioritising investment in skills and infrastructure, while reviewing regulation to remove unnecessary red tape, all the ingredients for growth a country can offer.

The problem is rebuilding economies takes time, with even direct cash injections into economies taking a decade to see full impact. Understandably, after years of living standards declining, people don’t want to wait. Yet, while we can’t turn back the clock, the Labour Government can help families to manage the cost of living, as I will cover next week.