The Student Room Group

Achieving the Highest Growth in the G7 – Is it time to turbocharge our economy?

An incoming Labour Administration HAS to prime the engines of our national economy in order to achieve its committing to long term economic growth.

The ambition of our next administration should be reaching annual trend rates of economic growth rate of at least 3% per year, every year, over a 10-year horizon period.

In order to achieve such levels of growth and ensure the lifeblood of our economy flows rapidly without clotting, a 12-month period of ‘sugar rush’ policies are required to provide the space for the real ‘starter’ measures to kick in.

How do we achieve 10 years of inflated growth, increase tax revenues, boost public spending and most importantly, invest in projects via capital spending.

Rebuilding our high streets:

‘Sugar Rush’ - Policy:
Between Friday and Sunday for 12 months introduce a 50% subsidy, capped at £10 per person, when food and drinks, including alcohol, is purchased.

When a similar policy was tried in August of 2020 for one month between Monday and Wednesday, the total cost amounted to around £850 million with 160 million meals being subsided, leading to a rapid, above average, increase of the number of individuals who went out for meals.

With the amended policy taking place between Friday and Monday, it is therefore sensible to assume a 500% increase in the number of ‘meals’ being subsided, in part due to alcohol being included this will lead to a healthy increase in both alcohol duty revenue and Value-Added Taxation.

The estimated ‘initial cost’ of the policy will be £4.2 billion per month, or £50.4 billion over a 12-month period although this cost should be ignored due to the purpose of the policy, that being starting the journey towards long term economic growth and providing the breathing space for the more substantive long-term investments to ‘kick in’ over a 10 year period, before interest, this policy would cost £4.2 billion per year.

‘Sugar Rush’ - Policy:
Boost the high street via ‘economic revival subsides.

All claimants of Universal Credit for a period of 12 months will be able to any high street retailer and purchase up to £700 worth of goods, with the retailer being able to claim back the full amount of the purchase from the UK government.

This will boost Value Added Tax revenues for a period of 12 months and most likely lead to a large boost in the number of high street sales.

The anticipated initial of the policy over a 12-month period, providing all 6.5 million Universal Credit claimants too part in the scheme, would be £4.55 billion per month, or £54.6 billion a year over a 10-year period, before interest, this policy would cost £5.45 billion per year.

‘Sugar Rush’ - Policy:
Seek to increase the number of new vehicles purchased within the UK by offering £20,500 towards the cost of a new vehicle (no part-ex required) also introduce a ‘interest claim back’ facility for dealerships so they can offer 0% rates of interests and amend criteria so they can take on ‘risker’ customers’.

Total registered new cars in the UK for 2024 was 1.9 million. If the policy was to increase the number of new cars by 200% to 5.7 million per year, the total initial cost would be £116.7 billion over a 12-month period over a 10-year period, before interest, this policy would cost £9.7 billion per month.

‘Sugar Rush’ - Policy:
Introduce a 12-month scheme to give 50% of the adult population (per year), 20.5 million individuals, a £500 per month (£6000 per year) grant which must be spent within a 12-hour window.

The total cost of the policy would be £10.2 billion per month, providing a 100% uptake, with a yearly estimated initial cost of £122.4 billion, although over a 10-year period, the finance per year would be, before interest, £12.4 billion per month.

‘Long Term Growth - Policy:
Partake in a 12-month policy of retrofitting 25 million homes within the UK with either heat pumps, solar panels, and battery storage.

The estimated cost of 6 solar panels, a 5.4 kw hour battery and other ‘fitting costs’ is around £9000. The total estimated cost of a heat pump, without the £7500 grant, is, on average, £12,000. Totalling £21,000 of work required.

25 million homes retrofitted would require almost 2.1 million homes per month, or 75,000 new installations per day.

In terms of the ‘policy cost’, this would amount to £525 billion, although, this policy could be financed over 25 years (the estimated life of the technology before impacting efficiency), costing before interest £21 billion per year.

Although, there would be indirect costs in terms of importing labour, given the large size of the protect. Assuming over a 12-month period 5 million individuals would be imported to the UK to work on the protects, this would result in an indirect cost, assuming an average salary, £58,000, or around £29 billion.

Outcome:
Therefore, the total estimated cost, per year and before interest, of the policies would equate to (before interest), £52.75 billion per year - leading to increases in tax revenues and driving economic growth through a combined of direct day-to-day spending and capital investment.

While the total combined cost would equate to £869.1 billion, or around 35% of GDP, this would be financed, in part over a 10-year period, while the ‘green measures’ financed over 25 years.
(edited 1 month ago)
Where does the money come from to finance these projects?
No government has any money of its own to use, which means it has to raise it from somewhere. The stark choices are either

a) Cut out something else instead
b) Raise more tax by getting certain businesses or people to pay more
c) Borrow it and end up servicing the debt for many years to come - this seems to be your preferred option.

What happens if there is a change of government or political direction during the payback period of 10-25 years?
What happens if other priorities such as increasing the strength of NATO or the NHS are thought to be more important and money has to be diverted to those ?
Reply 2
Original post by SomeonesDad
Where does the money come from to finance these projects?
No government has any money of its own to use, which means it has to raise it from somewhere. The stark choices are either
a) Cut out something else instead
b) Raise more tax by getting certain businesses or people to pay more
c) Borrow it and end up servicing the debt for many years to come - this seems to be your preferred option.
What happens if there is a change of government or political direction during the payback period of 10-25 years?
What happens if other priorities such as increasing the strength of NATO or the NHS are thought to be more important and money has to be diverted to those ?

You're correct.

My prefered outcome is financing the debt over a period of 10-25 years.

In terms of a change in government, the measures proposed would take place over a 12 month period, therefore meaning any change in administration wouldn't hopefully take place for at least another 4 years.

After a period of 4 years, the measures proposed would already be set into motion, therefore meaning lower energy bills and day-to-day consumer savings in terms of purchasing power.

If another administration was to take over after 5 years, it would be upon them to explain why it could no longer finance the £50 billion a year or so extra over a long term period.

The next administration would enjoy the benefits of the large injection of capital into the economy and if inflation was an issue, they would absorb the political capital in terms of explaining why inflation was not decreased over their 5 year term.

10 years of government followed by 5 years of 'inflationary' opposition before a reset wouldn't be hard to counter.

Nearly £900 billion borrowed over a 12 month period, followed by repayments over a maximum of 25 years, with a new government taking over for an additional 5 years after 10 years, would quickly mean another £900 billion of investment could take place therafter.
Reply 3
Original post by EmilyJade24
An incoming Labour Administration HAS to prime the engines of our national economy in order to achieve its committing to long term economic growth.
The ambition of our next administration should be reaching annual trend rates of economic growth rate of at least 3% per year, every year, over a 10-year horizon period.
In order to achieve such levels of growth and ensure the lifeblood of our economy flows rapidly without clotting, a 12-month period of ‘sugar rush’ policies are required to provide the space for the real ‘starter’ measures to kick in.
How do we achieve 10 years of inflated growth, increase tax revenues, boost public spending and most importantly, invest in projects via capital spending.
Rebuilding our high streets:
‘Sugar Rush’ - Policy:
Between Friday and Sunday for 12 months introduce a 50% subsidy, capped at £10 per person, when food and drinks, including alcohol, is purchased.
When a similar policy was tried in August of 2020 for one month between Monday and Wednesday, the total cost amounted to around £850 million with 160 million meals being subsided, leading to a rapid, above average, increase of the number of individuals who went out for meals.
With the amended policy taking place between Friday and Monday, it is therefore sensible to assume a 500% increase in the number of ‘meals’ being subsided, in part due to alcohol being included this will lead to a healthy increase in both alcohol duty revenue and Value-Added Taxation.
The estimated ‘initial cost’ of the policy will be £4.2 billion per month, or £50.4 billion over a 12-month period although this cost should be ignored due to the purpose of the policy, that being starting the journey towards long term economic growth and providing the breathing space for the more substantive long-term investments to ‘kick in’ over a 10 year period, before interest, this policy would cost £4.2 billion per year.
‘Sugar Rush’ - Policy:
Boost the high street via ‘economic revival subsides.
All claimants of Universal Credit for a period of 12 months will be able to any high street retailer and purchase up to £700 worth of goods, with the retailer being able to claim back the full amount of the purchase from the UK government.
This will boost Value Added Tax revenues for a period of 12 months and most likely lead to a large boost in the number of high street sales.
The anticipated initial of the policy over a 12-month period, providing all 6.5 million Universal Credit claimants too part in the scheme, would be £4.55 billion per month, or £54.6 billion a year over a 10-year period, before interest, this policy would cost £5.45 billion per year.
‘Sugar Rush’ - Policy:
Seek to increase the number of new vehicles purchased within the UK by offering £20,500 towards the cost of a new vehicle (no part-ex required) also introduce a ‘interest claim back’ facility for dealerships so they can offer 0% rates of interests and amend criteria so they can take on ‘risker’ customers’.
Total registered new cars in the UK for 2024 was 1.9 million. If the policy was to increase the number of new cars by 200% to 5.7 million per year, the total initial cost would be £116.7 billion over a 12-month period over a 10-year period, before interest, this policy would cost £9.7 billion per month.
‘Sugar Rush’ - Policy:
Introduce a 12-month scheme to give 50% of the adult population (per year), 20.5 million individuals, a £500 per month (£6000 per year) grant which must be spent within a 12-hour window.
The total cost of the policy would be £10.2 billion per month, providing a 100% uptake, with a yearly estimated initial cost of £122.4 billion, although over a 10-year period, the finance per year would be, before interest, £12.4 billion per month.
‘Long Term Growth - Policy:
Partake in a 12-month policy of retrofitting 25 million homes within the UK with either heat pumps, solar panels, and battery storage.
The estimated cost of 6 solar panels, a 5.4 kw hour battery and other ‘fitting costs’ is around £9000. The total estimated cost of a heat pump, without the £7500 grant, is, on average, £12,000. Totalling £21,000 of work required.
25 million homes retrofitted would require almost 2.1 million homes per month, or 75,000 new installations per day.
In terms of the ‘policy cost’, this would amount to £525 billion, although, this policy could be financed over 25 years (the estimated life of the technology before impacting efficiency), costing before interest £21 billion per year.
Although, there would be indirect costs in terms of importing labour, given the large size of the protect. Assuming over a 12-month period 5 million individuals would be imported to the UK to work on the protects, this would result in an indirect cost, assuming an average salary, £58,000, or around £29 billion.
Outcome:
Therefore, the total estimated cost, per year and before interest, of the policies would equate to (before interest), £52.75 billion per year - leading to increases in tax revenues and driving economic growth through a combined of direct day-to-day spending and capital investment.
While the total combined cost would equate to £869.1 billion, or around 35% of GDP, this would be financed, in part over a 10-year period, while the ‘green measures’ financed over 25 years.

Does this mean you're no longer setting up a new party to fight the general election with your policy agenda?

Is this some kinda like LARPing but with politics?
Between Friday and Sunday for 12 months introduce a 50% subsidy, capped at £10 per person, when food and drinks, including alcohol, is purchased.
How would you administer the system to prevent widespread fraud? Would you employ an army of people to oversee the scheme?
What about the effects on the economy of an increased number of people ringing in sick on Monday morning because they've got a hangover?

All claimants of Universal Credit for a period of 12 months will be able to any high street retailer and purchase up to £700 worth of goods,
You think that incentivising people to not work is a good way to boost the economy?

Seek to increase the number of new vehicles purchased within the UK by offering £20,500 towards the cost of a new vehicle
I'll have a brand new left hand drive Toyota Yaris 1.4D then, with multiple options ticked to bring it up to a price of £20,490. And I'd thereby get a free car. Which I'd then sell abroad. Probably for about £10,000 as millions of other Brits would be doing the same.

Introduce a 12-month scheme to give 50% of the adult population (per year), 20.5 million individuals, a £500 per month (£6000 per year) grant which must be spent within a 12-hour window.
How would you determine who get the £6k and who doesn't? I'd spend the £500 on a combination of food shopping and shares in Toyota.

Partake in a 12-month policy of retrofitting 25 million homes within the UK with either heat pumps, solar panels, and battery storage.
How would you avoid poor quality installation at that roll-out rate? Leading to "snagging" for years to come?

In terms of the ‘policy cost’, this would amount to £525 billion, although, this policy could be financed over 25 years
What effect would it have to the economy in the long term when the Government has to pay off this debt? Is this how you run your own personal finances? Spend a load on tick and then go hairshirt or default on your loans.

What's the point in having a growth splurge, just so you can boast about this to the other G7 countries, when it's followed by an inevitable growth crash, because the growth was entirely artificial and a short term sugar rush followed by a long term insulin crash?

We in the UK are fortunate to live in a relatively prosperous country. OK we don't have as high a standard of living as Switzerland - for example - but we do have a higher standard of living than South Sudan.
Why should the UK Government start meddling?
Why not have a Government with the mentality that it is merely a servant of the people? And that the people aren't servants of the Government.
Why not have a Government that gets out of the day to day lives of its' citizens? And allow the economy to be what it will be.
Cycles of growth and stagnation or contraction could just be embraced and accepted for what they are.
Over the last 200 years, the UK has been a great place to live, even during the most severe economic depressions.

I cannot agree with the hand-wringers that say "Aren't things awful now. The Government should step in and do something."
And that is the sub-text of your opening post.

Quick Reply

Latest

Trending

Trending