‘It really is that bad’: Why Labour can’t win on the economy
Labour is not winning the economic argument because it is failing to come up with a credible alternative "growth model", a leading political academic has claimed.
Colin Hay, professor of political analysis at the University of Sheffield, suggested the opposition's big problem was breaking free of the "crisis discourse" now firmly entrenched by the Conservatives and Liberal Democrats in government.
Writing in the British Journal of Politics and International Relations, he argued the emphasis on the crisis of debt having a "strong hold over government policy" was no accident – and warned Labour needs to do more to combat it.
"What such an alternative crisis discourse calls for is a new growth model to replace the one that is broken," he wrote.
"And herein lies the problem. For although, in their different ways, all of the principal parties acknowledge the need for an alternative growth model, none appear to have a clear sense of what one might look like."
He suggested a "heavy dose of Keynesianism" might be one tempting alternative for the Labour party to suggest, but said even a bold call linking the level of deficit reduction to the amount of growth attained would not be enough.
"This in itself is not sufficient," Hay argued. "For, in the absence of an alternative growth model, it still falls far short of the minimum required to animate an alternative economic strategy."
His article considered a possible transition to a new growth model based on a manufacturing model focused on exports similar to the 'Modell Deutschland'.
This could include an emphasis on reducing the cost of capital and making major "public investment in support of a clearly articulated growth strategy", Hay suggested.
He warned such a move would only achieve up to two per cent of extra growth, however, leading him to conclude the situation remains bleak for the opposition – and the UK economy.
"Britain has lost a growth model as, in their different ways, all the principal parties now accept," Hay concluded in the article, published in the BJPIR's February 2013 issue.
"But it has not found an alternative; and the transition to an alternative – if, as and when one can be identified—is unlikely to prove a rapid or painless process. It really is that bad; and it is likely to get worse before it gets better."
