Saturday, 20 October 2012

How the UK can recover: Nick Crafts has the answer

Nick Crafts gave the RES policy lecture on 18 October.  He's right on almost everything: here's what he has to say

If fiscal consolidation continues and radical changes to monetary policy are ruled out, it is mainly ‘supply-side’ reform that can restart UK growth without doing longer-term damage to the economy. Among other things, that means repairing infrastructure, improving education, reforming taxation and tackling the restrictive planning system.

And here's the answer

But one area that could deliver both short-term stimulus and long-term efficiency is private house-building – as happened in the 1930s recovery from recession. Today’s planning restrictions mean that the stock of houses is three million below and real prices are 35% above what they would be if market forces operated freely.

Slides of Nick Crafts’ RES Policy Lecture.