School hosts Chancellor's first policy speech
Rt Hon Alistair Darling MP says his government aims to maintain economic growth
As Britain enters its 61st quarter of continuous growth, Chancellor of the Exchequer, Rt Hon Alistair Darling MP told a packed London Business School audience that stability, openness and cooperation are key to ensuring that Britain sustains its recent economic success. The policy speech was Darling’s first as Chancellor. [Darling was appointed as Chancellor on 28 June 2007.]
The Chancellor was welcomed to the School on 25 July by Acting Dean Sir Andrew Likierman, who worked at the Treasury when Darling was a Minister. In his speech, Darling stressed his government’s intention to maintain the country’s current economic strength and London’s place on the world stage as “the global city.” People used to fear for London’s future, Darling said. “We have achieved something that, if you were here 20 years ago, you would think is impossible.”
His strategy to keep the economy on track in an atmosphere of quick change and fierce competition due to globalisation is multi-pronged. “We must not allow globalisation to shape us to our disadvantage,” he said. “We must instead shape the response to globalisation. We must recognise the challenges posed by globalisation, rise to them and then be ready to seize the opportunities that a rapidly expanding global economy can bring.”
To do so, he said that his government will work to maintain stability, keeping inflation in check and supporting the Bank of England’s monetary policy. It will also maintain the UK’s openness to foreign investment. But he expressed disappointment that the openness enjoyed in the UK is not the norm elsewhere. “Investment needs to be a two way process,” he said, adding that British firms should be able to invest abroad as easily as the UK allows foreign companies to invest on its shores.
Economic reform, improved regulation and “increasing efficiency and accountability” are also important planks to the country’s response to globalisation. Labour’s last budget, delivered when Prime Minister Gordon Brown was still Chancellor, included reforms to simplify the tax code, for instance, “ensuring our business tax rates and regime remain competitive.”
Darling also promised funding to improve the country’s infrastructure, human capital, and nurturing of innovation and science. For instance, he reiterated the government’s promise to increase flood defence spending to £800 million a year. With the economy demanding five million highly-skilled workers in the next ten years, Darling also said the government’s investment in education will increase every year to over £74 billion in England alone by 2011.
Also paramount is the need to support innovation, and the Chancellor said that public investment in science will rise every year to more than £6 billion by 2011. The government hopes to “encourage a more seamless progression from pure scientific invention to commercial success,” he said.
Finally, he stressed that international cooperation will help to unlock the benefits of free trade. He said: “countries like us have a simple choice: to retreat behind national borders, hope we can keep the tide of globalisation at bay, or have confidence in our ability to face it head on and make globalisation a force for good...”
Professor Likierman said that having Darling deliver his first major policy speech on campus was a real compliment to the School, especially as thousands of our graduates and current students work in London. “Seeing decision-makers of this calibre is the kind of opportunity that it’s great to be able to offer our community,” he said. “I’m especially pleased that, having introduced finance ministers from several countries here over the past few months, I had the chance to introduce our very own.”