Chancellor’s speech should make the government a core investor in our economy

The New Economics Foundation (NEF) has responded to chancellor John Healey’s speech this morning.

Jaya Sood, senior economist at the New Economics Foundation and former Treasury official, said:

“The chancellor is right that the UK desperately needs more investment distributed across the country. For too long we have relied on markets and foreign investors to take the lead, resulting in underinvestment, poor coordination, and value being extracted from — rather than invested in- our economy.

“It’s time for this government to change tack by becoming a core investor in the UK itself – rather than simply making conditions less risky for the private sector. If this government is serious about taking back public control, it has to mean more than simply strengthening regulations. Instead, the chancellor should seriously scale-up existing public institutions like the National Wealth Fund. These institutions can provide fiscally neutral investment to projects that build our resilience, otherwise we will remain exposed to inflationary shocks that will knock back our growth again and again.

“But the glaring omission from the chancellor’s speech is demand. If households don’t have
money to spend, then businesses cannot thrive. By lowering the price of essentials like housing and energy through a balanced budget, this government can play its role in tackling inflation and stop the Bank having to hike rates, which as we know damages investment.”

Notes

The New Economics Foundation is a charitable think tank. We are independent of political parties and committed to being transparent about how we are funded.