Crunch could be the making of us

2 min read

Faced with an impending recession brought about in no small part by over-spending on borrowed money, it seems strange that one suggested remedy is to spend, spend, spend on borrowed money.

However odd it sounds, that is exactly the course of action being talked about in many quarters — perhaps most significantly No 11 Downing Street — as a route back from the economic brink.

Keynesian economics are back in style. If the service economy grinds to a halt, private sector investment dries up and consumers run out of cash, then the government is left with the only cheque book in town. It should open it, the theory goes, and start spending big on blockbuster projects that employ people and pour money into the coffers of businesses. If the country needs to run up a stonking great overdraft in the process, so be it.

If this scenario comes to pass, the UK could soon undergo a seismic shift in how it sees itself.

Imagine if a whole nation's economy could be embodied by a single person. Until recently (let's say about six weeks ago) the UK would have been a high-rolling banker with a serious shopping habit, a big credit card bill and a buy-to-let mortgage funded by the rent of a couple of Polish builders.

As things stand now, the bank job has vanished, the credit card is up to its limit and the builders have gone home in disgust at how little their pound gets them.

Citizen UK is sitting around wondering what to do next. Fortunately the local paper is full of job adverts for work on major transport projects, huge defence contracts, a new generation of power stations, a vast array of wind turbines and a push to get a UK-built spacecraft to the Moon.

The last of these may be a little far fetched but the rest could certainly pique the interest of our down-at-heel former city slicker.

Suddenly, a technical career looks like a better bet than management consultancy. All the action is in designing, manufacturing and building, and soon nobody looks askance at Mr or Mrs UK when they announce that they are settling down to a new career in engineering.

Without doubt, the economics of a Keynesian spending spree on big capital projects are fraught with peril, not least the storing up of big national debts for the future.

But if this sort of economic shock therapy is chosen — and targeted at the right projects — the transformation of the UK into a country where engineering and manufacturing are once again part of the national psyche could be a silver lining in our dark clouds.

Andrew Lee