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Aldersgate Group’s new “Economy That Works” report challenges a conventional view of GDP growth as the sole definition of economic success
In the 1992 Presidential election, Bill Clinton's campaign strategist kept political interns focused on general election priorities with the infamous slogan "[it's] the economy, stupid!"
All around the world elections are fought on the economy, but will the UK electorate get the kind of fundamental economic debate we need over the next six months?
Despite encouraging signs of a recovery, the UK economy is still listing in the doldrums. Any positive signs that UK growth is returning are to be welcomed, but many across the political spectrum fear longer-term problems if our economy becomes disconnected from the needs of society and the limits of our natural resources.
In the UK, we are seeing a growing disconnect between GDP growth and the needs of society. Inequality is rising and, despite higher employment rates, the UK is stuck in its longest ever period of wage stagnation.
Looking at the banking crisis, we have seen all too clearly what happens when the economy becomes self-serving and widens gaps in our society. Business as usual risks locking us into a Groundhog Day scenario where linear growth without some major realignment of our economic priorities seems likely to consign us to a vicious circle of boom and bust.
Why after all these years of growth are we not solving some of our biggest social and environmental challenges? Bankers aside, is our economy making things better or worse for our society and the natural environment? Is our economy working, in fact? How can we reinvent the economy and align it more closely with the needs of society? We need to ask ourselves what the economy is for.
The business and civil society coalition behind the “Economy that Works” campaign asks policy-makers to look beyond business as usual, question what our economy is for and look at how a growing economy can also focus on delivering important social and environmental benefits.
The “Economy That Works” report challenges a conventional view of GDP growth as the sole definition of economic success and identifies six essential characteristics a resilient UK economy needs to deliver a prosperous UK society and side-step future economic risks:
- High employment - investment in job generation and skills development, promoting flexible and part-time working, investing in lifetime educational support to increase financial independence and create fulfilling work opportunities.
- Equality of opportunity - unlocking a 'double dividend': reducing inequality and boosting social and economic mobility for all; cutting the cost of employment and introducing living wage levels.
- Wellbeing at the core - According to the Prime Minister, we need to “start measuring our progress as a country, not just by how our economy is growing, but by how our lives are improving”. Increasing wellbeing, supported by strong healthcare & education systems, strong social networks & democratic institutions will reap economic, social and environmental benefits.
- Low carbon - there is no such thing as a high carbon, low cost future; effective carbon pricing and policy support for innovation and deployment of low carbon technologies are essential. The environmental goods and services sector is growing and already represents £122bn (9.3 per cent) of the UK economy.
- Zero waste - promotion of a circular economy to cut landfill and promote re-use of materials makes economic and environmental sense; UK could cut its reliance on raw materials by 20 per cent by 2020 and unlock a £5.6bn opportunity in UK re-manufacturing.
- Enhancing nature - The UK's diverse natural capital provides the economy and society with food, clean air, wildlife, energy, wood, recreation and protection from a wide range of hazards. Measuring this value to the UK economy and preventing its exploitation makes sound business sense.
The report does not pretend to have all the answers but by asking the right questions about what we want from our economy, we can help the UK side-step future economic risks and put it back on a path to better growth, better jobs and more sustainable prosperity.
To achieve this, what is needed is policy change to enable business to thrive under a new economic paradigm. With a UK election in May 2015, we'll be working hard with our partners to explain and accelerate this blueprint for "better growth" and inform better choices about the kind of economy our businesses and our citizens want.
Many of our partners have long been at the forefront of driving progressive ethical and sustainable business practices and we will continue to explore and support innovative cross-sector policy solutions that can start to unlock a legacy of prosperity and competitiveness for UK companies, communities and citizens now and in the future.
I hope leaders of all political parties will keep this debate at the very heart of the 2015 election campaign, so voters and businesses can have a more honest conversation about what our economy should be doing for all of us. If we do not build a model with metrics beyond GDP growth to address widening gaps in society, our politicians will have a much tougher job dealing with the consequences.
Earlier this year, Channel 4's economics editor Paul Mason wrote for the Guardian: "populations armed with smartphones, and an increased sense of their human rights, will not accept a future of high inequality and low growth."
It is up to us all to chart an alternative course for our economy and ensure it works harder for our society and for nature.
Oliver Dudok van Heel report author and campaign director of 'An Economy that Works'. He is based at the Aldersgate Groupeconomic recovery recovery UK economy UK Government