Leaving the EU creates a huge opportunity; a moment when we can think more deeply about those fundamental issues affecting the UK’s future, which we haven’t needed to confront during the 40 years we’ve spent under the EU’s umbrella.
We lag behind much of the developed world in productivity. It takes us 5 days to produce what a German worker can do in four, so we work longer hours for lower pay than people in other countries. Becoming more productive is the only way to raise our living standards affordably, and build an economy that works for everyone.
The first step, as I argued in The Great Rebalancing, is to build and invest more in economic infrastructure (things like road, rail and ports) and to keep doing it consistently, ending the infrastructure ‘boom and bust’ we’ve suffered for years with a target like the ones we’ve always used for Defence (2% of GDP) and Foreign Aid (0.7% GDP). The Chancellor introduced exactly these measures four weeks after I called for them, in his 2016 Autumn Statement.
The next step, which is also explained in The Great Rebalancing, is to accept that Government borrowing is only ethical - generationally just - for building infrastructure which our descendants will use as well. We must pay for everything else – things like our health care, police or pensions – ourselves, through our taxes, otherwise we’re just handing the bills for our current lifestyle to our children through borrowing. That means we need to get the Government’s budget into balance, so we stop adding to the debt before slowly, like saving for a mortgage or a pension over many years, we build up a huge savings fund – a Sovereign Wealth Fund – to pay for our state pensions and benefits.
This is a very big, long-term solution for some equally big, long-term and ingrained problems. It will need a sustained political, social and financial commitment, over several generations, if we’re to complete it successfully. It is the kind of commitment which parents often make for their own children or grandchildren, to ensure they have a better life than they did. These proposals will do the same for our entire country. We should think big.