The Growth Commission’s work is going to be vital in 2025, by Jonathan Isaby.
Dear friends and supporters,
Happy New Year! (if I am still allowed to say that halfway through January).
I hope you are your loved ones were able to enjoy some rest and relaxation over the festive season – although what the Office for National Statistics delivered on 23rd December could hardly be described as an early Christmas present: confirmation that living standards in the UK are falling, as measured by the all-important metric of GDP per capita. Its damning verdict was that ‘real GDP per head is estimated to have fallen by 0.2% in Quarter 3 (July to Sept) 2024 and is down by 0.2% compared with the same quarter a year ago’.
This morning’s news from the ONS was hardly any better with the latest growth figures covering the month of November showing a 0.1% increase in GDP – but that’s before taking into account the increasing population, which means overall living standards are still continuing to fall, as our Chairman, Shanker Singham, pointed out in his response to the numbers.
Little wonder, then, that the Chancellor, Rachel Reeves, is reportedly searching for ‘new ideas on economic growth’, according to a Times headline last week. Of course, she need look no further than The Growth Commission for inspiration. Our Autumn 2024 Growth Budget published in November advised her against pursuing a range of policies which she promptly proceeded to adopt, while making a suite of recommendations that would help grow the economy. Be in no doubt, we will continue to promote those positive pro-growth policies at every opportunity over the coming weeks and months.
One of the measures we warned the Chancellor against in our report was increasing National Insurance Contributions. The House of Lords debated the National Insurance Contributions (Secondary Class 1 Contributions) Bill last week and in his contribution to the debate Lord Moynihan of Chelsea cited our calculations on the detrimental impact of the government’s decision to raise NICs. You can watch a clip of what he had to say here. Incidentally, Lord Moynihan has recently published his own analysis of the UK’s stagnant economy and what can be done to resuscitate it across two volumes of Return To Growth: How To Fix The Economy which are available to buy here and here.
The movements in the gilt markets in recent days have certainly heightened concerns about Rachel Reeves’ handling of the economy. Growth Commission Chairman Shanker Singham was interviewed by Tom Swarbrick on LBC to provide his take on the economic challenges facing the government and you can listen to what he had to say here.
Shanker also spoke to The Sun at the turn of the year, setting out why it would be such a bad idea for the UK to dynamically align its regulations with those of the EU. He was even cited by name in the paper’s editorial, which stated:
For the first time this decade, Britain has an Anglophile US President keen to do a deal which could transform our economic fortunes. What is the point of risking that relationship by cosying up further to a failed EU which we fought so hard to free ourselves from? Don’t take our word for it. Listen to Shanker Singham, one of the world’s leading trade experts. Living standards have no chance of getting better if Labour resets ties with Brussels and ends up derailing a US deal, he says.
He also addressed this crucial topic in an interview with GB News, a clip of which you can watch here, while in this piece published yesterday on the CapX website, he set out why policies to reduce energy costs for UK consumers and businesses are fundamental to delivering economic growth.
Shanker is not the only Commissioner to have been hitting the airwaves at the beginning of the year. Christine McDaniel appeared on CNBC’s Squawk Box last week to explain the potential impact on the U.S. economy if President-elect Trump were to impose new or higher tariffs. She also covered this and other topics in an extended interview on C-SPAN’s Washington Journal, which you can watch in full here.
Finally, if you’ve ever wondered how government interventions in the guise of ‘industrial policy’ can undermine the relatively free exercise of markets, another of our Commissioners, Alden Abbott, has that covered here.
That’s all from me for today.
Very best wishes,
Jonathan
Jonathan Isaby
Director, The Growth Commission
P.S. If you don’t already follow the Growth Commission on X/Twitter, do follow @TheGrowthComm to keep up to date with our activities between these bulletins. And if you believe what we are doing is important, why not make a donation to help support our work? Your donation will help us make even more of an impact this year. You can donate online via PayPal or alternatively drop me a line and let’s have a conversation about how you can donate and what your donation could do.
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