UK must move on from economic ‘doom loop’ of underinvestment – Lord Mandelson
The Labour peer also said Boris Johnson’s ‘hard Brexit’ has left the country ‘driving with an economic handbrake on’.
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The UK needs to transform itself into a high investment economy to shift out of its low growth “doom loop”, one of the architects of New Labour has said.
Lord Mandelson, one of the key figures in transforming the Labour Party under Tony Blair and who went on to serve in the cabinet, hit out at “persistent underinvestment”.
His comments came after a report by the Institute for Public Policy Research (IPPR) found that the UK has been bottom of the league in the G7 group of major economies when it comes to investment for 24 out of the last 30 years.
Countries like Slovenia, Latvia and Hungary attract higher levels of private sector investment than the UK as a per cent of GDP, the think tank revealed.
Lord Mandelson, who served as business secretary in Gordon Brown’s government, spoke in Edinburgh on Thursday to claim that this low level of investment is linked to falling productivity in the UK.
Speaking ahead of Chancellor Rachel Reeves’ first Budget later this month, the Labour peer spoke at an event organised by the Reform Scotland think tank.
He said the UK needs to “appreciate — and measure — the value of investment, rather than merely the cost of it”.
He took aim at Brexit, arguing that the impact of leaving the European Union means administrations across the UK need to get every area of economic policy right, including industrial policy, infrastructure, planning, skills, science and innovation, regulation and migration by skilled workers.
He said: “The very hard Brexit forced through by Boris Johnson, means that we are, for now, driving with an economic handbrake on, and we can’t put that handbrake off. It is what it is.
“It’s difficult to see this being reversed within the next decade. That’s not just about our politics, but politics within the EU.
“If we think that re-entering he EU, or even renegotiation, is anything like the unilateral position on our part, it isn’t.
“So the new Government will have to focus in the meantime on mitigating the higher barriers that we have created to our nearest largest market as we possibly can.”
He said getting the Government’s economic growth strategy right will mean the UK becomes “the most dynamic economy in Europe”.
This means that while the UK is “damaged by Brexit” it would not be “defined by it” and would be “still the most attractive European market for private and venture capital”.
The UK Government has been contacted for comment.
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