Laws block investment

The CBI/DTI Be Fit for the Future campaign has been a long time in development. The reason the CBI hopes it will succeed where other initiatives have failed is the simplicity of its message: if the under-performing tail of British industry could be raised to the average best-practice standard of the competition, GDP would grow […]

The CBI/DTI Be Fit for the Future campaign has been a long time in development. The reason the CBI hopes it will succeed where other initiatives have failed is the simplicity of its message: if the under-performing tail of British industry could be raised to the average best-practice standard of the competition, GDP would grow by £60bn. This would rise to £300bn for the whole economy.

The worrying thing is that all these efforts to get companies to invest more and boost productivity could be held up by restrictive regulations that are in the hands of government itself. If last week’s McKinsey report is to be believed, low investment, low skills and undersized operations are effects, not causes of the productivity problem. The real culprit is in the Government’s hands: restrictive land use regulations, a low-wage environment that allows labour-intensive firms to survive, and so on. It’s worth thinking about.