Take the fundamental non-growth of the UK economy since 2008 (productivity, real wages, GDP per capita) and compare it to its peers (which are they?). If you had to attribute the causes of this deficit to various factors, how would you proceed?
Recently I had lunch with some knowledgeable Brits, and they suggested that NIMBY was to blame for at least half the problem. I thought I’d give my mental guesses and see what the general opinion on the matter looks like. Such an exercise can never be very precise, but it is at the very least a good way to calibrate worldviews. Here is!
1. The British economy does not specialize in making things that foreigners or its own citizens want to buy. In other words, the tides have turned against the country. Its brand of European/global financial and business services simply hasn’t worked well. Where were the big tech companies? Was it in the right manufacturing segments at the right time? (For part of this period, Germany was. The Netherlands still is.) Has it benefited from a boom in resource prices, as Australia and Canada have? No.
50 percent. Over the decades, I find that growth rates change so much, even when policies don’t change much, that this is usually my main culprit.
2. Brexit: 20 percent.
3. NIMBY: 15 percent.
4. Lack of cheap energy, energy construction restrictions: 10 percent.
5. The general decrepitude of a part of the population matters more than before: 5 percent. Keep in mind that we are trying to explain the recent growth gap here, not theorize about levels. Otherwise it would be more.
These are just estimates, what do you think?
