The new UK prime minister’s outdated economic plan attempts to apply Thatcher-era solutions to twenty-first-century problems. But lifting Britain’s chronically low growth rate and boosting its flat-lining productivity requires a government that does not shy away from actively shaping markets.
CAMBRIDGE – What is the government’s proper role in an advanced market economy? That is the fundamental question at the heart of the economic debacle in the United Kingdom. So far, the focus has been on Prime Minister Liz Truss’s disastrous macroeconomic judgment and the (entirely understandable) reaction of financial markets to her fiscal plan. But Truss and her Chancellor of the Exchequer, Kwasi Kwarteng, got one thing right: the UK’s core problem is that long-term growth has ground to a halt.
CAMBRIDGE – What is the government’s proper role in an advanced market economy? That is the fundamental question at the heart of the economic debacle in the United Kingdom. So far, the focus has been on Prime Minister Liz Truss’s disastrous macroeconomic judgment and the (entirely understandable) reaction of financial markets to her fiscal plan. But Truss and her Chancellor of the Exchequer, Kwasi Kwarteng, got one thing right: the UK’s core problem is that long-term growth has ground to a halt.