In difficult times, good policy becomes more important

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The most important economic problem that the UK faces is the long -term production of productivity. This was a topic My column two weeks ago. Yes, the moment’s disorders cannot be ignored. But the urgent is not necessarily important. With the exception of the disaster (World War or Global Depression, for example, either of them can do the United Kingdom), and the main determinant of our prosperity and stability is the decisions it makes – and inside – this country. The economy must be raised from nearly two decades of recession.

This does not mean that Donald Trump’s war on the open global economy is not related. How can it be? It raises huge and unpredictable barriers in front of global trade, and at the same time, the destruction of the institutional architecture created by its predecessors for wisdom for eight decades. However, this is unlikely to be in itself the end of the economic world, at least for the United Kingdom.

According to the National Statistics Office, the United Kingdom exported the goods of 59 billion pounds to the United States in 2024, only 16.2 percent of total goods exports. Its services of 137 billion pounds to the United States were 27 percent of total services exports, much more important. Details of UK exports to confirm the contrast. The category of services with the largest exports to the United States was “other business services”. This reached 61 billion pounds in 2024, which was 33 percent of all other business services exports. It is striking that other business services exports to the United States were equal to more than all goods. The largest category of goods exports to the United States was machinery equipment, at a modest price of 29 billion pounds. Moreover, only 19 percent of exports in this category went to the United States.

This is a good position for the United Kingdom to be. Trump – in this regard, is very similar to local Brexiters – he does not seem to be very interested in services. This, the fanatics feel, is not what “real men” do: they make steel or coal. Moreover, definitions cannot apply to services.

It is difficult to analyze the indirect effects of Trump’s policies, economic and broader. like Megan Green Note on April 25, that the uncertainty multiply in each direction. It is definitely difficult to see a rise to the United Kingdom, unlike the opportunity to lure the first -class people to work in a country still links the idea of ​​the rule of law.

However, the main effects of Trump’s shock are that good policy becomes more important: it is always in difficult times. In general, the goal should be to make the financial position and the financial system more flexible, enhance the elasticity of the economy and increase the investment significantly in human, physical, inappropriate – public and private capital.

Unfortunately, there is no way such things can be done in a country with slow productivity growth and a great deficit in the current account, without suppressing consumption. This is a fact that the government does not want to face. but, According to the International Monetary FundThe average national savings rate in the United Kingdom was between 2021 and 2024 15.6 percent of GDP, which was placed in 35th place among 37 high -income countries, before Cyprus and Greece only. This must rise if the low investment in the UK is to do so as well.

However, the ability to finance high investment is just one necessary condition for faster growth. There should also be opportunities for investment. Some of them will be produced by canceling the right restrictions, such as relaxing planning controls and eliminating the most absurd environmental restrictions and excessive restrictions on labor elasticity. But others will require effort. In particular, growth means change and thus requires innovation. This is a risk fraught and expensive with many positive external factors: a new successful activity will always participate in the benefits of its pioneers with others.

This is why there is a healthy situation to support the government to innovate. The question is how to do this. David Welights, a former governor minister, published a short booklet for the decision -making institution on “”How to do the industrial strategy“, Which explores the possibilities. My point of view is that the costs of intolerance of the risk of failure exceed the costs of taking it. It is very clear, as Alexander Hamilton believes, the government can work and should serve as an incentive for change. There will be many failures.

The big point I was exposed to at home for some time is that the more dangerous and worse the world of economic performance, the more harmful is the reflexive conservation in the United Kingdom. Wealth prefers courage.

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