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Echo article on securing economic growth
The growth figures for the last quarter of 2009 showed that we had come out of recession but growth was only 0.1%. We know the economy needs to grow faster than this but the question we face is our growth going to come from? I was talking to people running businesses in my constituency at the weekend and they were asking the same question. They are not confident about the current state of the economy. Whilst this has been a global economic crisis, nothing can disguise the fact that we entered this period ill prepared and Britain is the last G20 country to leave recession. It is clear that we need a new model of economic growth, otherwise we will end up back where we started.
The old model of growth was built on debt: an irresponsible public spending boom, an overblown banking sector and unsustainable consumer borrowing on the back of a housing bubble. We cannot go on like this, we need a new approach.
The country needs a strategy for growth that is sustainable. This requires nothing short of a new British economic model. Instead of a culture of easy spending on credit cards leading to an unsustainable debt burden, we need a culture of personal savings and investment to act as a permanent, sustainable foundation of our prosperity. We need to create more jobs in the private sector whilst reforming our public sector to meet the pressing need to get more value for money for the taxpayer. We need a more diversified economy so that we can become less reliant on financial services. And we need to do all this whilst reducing a record budget deficit to restore investor confidence in UK plc.
The most important way to secure growth is to maintain economic stability. To do this we must safeguard Britain’s credit rating with a credible plan to eliminate a large part of the budget deficit over a Parliament. I met a group of investors in government debt last week and they were clear about the need to reduce public spending to avoid forcing up interest rates putting recovery at risk. Our fiscal policy will seek to help keep interest rates lower for longer. This has to be the bedrock of any growth strategy.
But this is just the beginning. We need to create a more balanced economy by boosting the hi-tech sector and entrepreneur, Sir James Dyson, is leading a task force to look at the measures we need to take to achieve this goal. This will help reduce the dependence of the economy on financial services by growing other sectors of the economy. There are new business opportunities as we seek to tackle climate change and we are looking at investing in new low carbon technology through our Green Investment Bank.
We want a return to sustainable growth, not just any growth. The old model has failed us. We cannot go on like this. It is time for change.