With the UK officially in recession, what should governments be doing? This debate was recorded at the Battle of Ideas festival 2023 on Saturday 28 October at Church House, London.

ORIGINAL INTRODUCTION

With the Conservatives doing badly in the polls and Labour riding high, the UK could have a new party in government in the next year or so. How will this change the relationship between the state and the private sector – and will it boost economic performance and living standards?

During the Corbyn years and even beyond, Labour has talked up the possibility of nationalising important parts of the UK economy – such as water and energy supplies and the railways. But more recently, Keir Starmer and Rachel Reeves appear to have rowed back on such pledges, with Starmer saying he would not be ‘ideological’ about state control.

Many commentators have pointed out that houses are not being built fast enough. While unemployment is relatively low, the quality of jobs is too often poor. Many argue that what it is needed is more state intervention, greater funding for healthcare, a return to state-provided housing and a proper industrial strategy to boost sectors that can be world-leading, especially in supporting the drive to Net Zero.

Others argue that for all the talk of free markets, we actually have too much state intervention and control. Businesses are bound up in regulation. Government expenditure is getting close to the equivalent of 50% of GDP. Planning rules make building anything almost impossible. Far from a free market, we have everyone from civil servants to central bankers determining how the economy develops, with little room for private initiative or democratic control.

But is the state vs market debate moot – because the ability of the state to change things is becoming exhausted? Increasing state spending even further would have relatively little impact, but government debt is already enormous in any event. ‘Cheap money’ policies of low interest rates and quantitative easing have had to be reversed to tackle inflation.

Whoever wins the next election, what is the best way forward for the UK economy?

SPEAKERS

Matthew Lesh

Ali Miraj

Hilary Salt FIA, FPMI, FRSA

CHAIR

Phil Mullan