Rt Hon John Redwood MP is Co-Chairman of the Economic Competitiveness Policy Group. In this article for ConservativeHome he argues that a more enterprising Britain will also be a freer, greener and more compassionate Britain.
The winds of global competition are blowing strongly on the world’s economies. We are living through a massive shift in economic power, as the Asian economies led by China and India emerge as global manufacturers, service providers and traders with attractive offerings to the customers of the world.
These winds could power us to greater success, or they could destroy business and jobs at home if our economy is not well secured and supported by a government that understands the needs of enterprise. If we respond by creating the right conditions at home and by offering the right goods and services to these emerging markets, globalisation can be an opportunity for the UK rather than a threat.
The Government claims that the UK has done well over the last fifteen years, with steady growth and relatively low inflation, but the last decade has been good for the world economy as a whole, characterised by the two massively favourable trends of easy money and a disinflationary environment.
Despite these very favourable trends the UK has fallen down the league table of the most competitive economies. Our growth rate has been flattered by inward migration and conceals 5.4 million people of working age without jobs living on benefits.
Such global trends can not be relied on for an acceptable rate of growth. With the current uncertainty in world markets we should proceed on the basis that money will be tighter in the years ahead than during the last decade. We should also recognise that China and India will not continue to exert strong downward pressure on prices to the extent that they have in the last ten years. The UK and USA can not afford to ignore inflationary pressures brought about by easy money at home.