Issue of the week: reshaping the economy

No one can predict the long-term impact of Brexit, but a reforming, pro-growth outlook will be crucial

“Having skulked in the shadows for days after the Brexit vote”, the Chancellor “has come out fighting”, said Alex Brummer in the Daily Mail. George Osborne may have given up on his unachievable fiscal target of a budget surplus by 2020, but he has remembered that “cutting taxes can have an energising effect” – and he has promised to slash corporation tax to 15%, against prevailing rates of 30% in Germany and France, and 34-38% in the US. That impetus, combined with the 10% devaluation of the pound, should have a galvanising effect on the country’s competitiveness. And it marks a welcome change from the “dismal” picture of post-brexit Britain painted by the Bank of England governor, Mark Carney, who seems “determined to show that his desperate warnings” about a loss of economic confidence and a “technical recession” (two consecutive quarters of shrinking GDP) are already proving right.

“Project Fear should not now turn into a self-fulfilling Project I Told You So,” said Allister Heath in The Daily Telegraph. But sadly, the PM appears to be “sulking” too. Rather than rallying the country behind a positive “pro-growth” message, the Government’s attitude of “passing the buck to its successor” is “inflicting real damage to our economy”. The situation in the property market ( see below) is genuinely worrying, but “commercial property is all about confidence” – and that is what we are not getting from the Government. Brexiters can attack Carney all they like, said Jill Treanor in The Observer, but he’s hardly alone in warning of a slowdown (Goldman Sachs has cut its forecasts for UK growth to 0.2%) – and at least the Bank has a plan. Carney has outlined measures to cushion Britain from the worst effects of any slowdown, and a financial framework that provides an element of certainty which will help companies to make plans for the future. That was what “put a rocket under the FTSE 100” last week. Brexit does offer opportunities for Britain, said Philip Aldrick in The Times. “Shorn of its austerity doctrine”, it would “be criminal” if the Government did not take advantage of record-low rates on sovereign debt to “borrow to invest”, with state-funded housebuilding at the top of the list. And, “if migrant labour is about to become more scarce, companies should start investing in their workforce”. As Carolyn Fairbairn, director-general of the CBI, observed last week, Britain’s disenfranchised workers have sent a “profound” message about “the way businesses speak and the way they act”. It isn’t just up to the Government to act in their interests now; “business has a role to play too”.