'Fundamental Reform Needed Says Miliband

A worse-than-expected slowdown in building has been blamed
for the worse than expected UK growth figures 

By Ben Aulakh

The Labour leader Ed Miliband has called for a ‘fundamental reform of British capitalism’, in an essay for one of the country’s leading public policy bodies.

Writing in ‘Juncture’, the Institute for Public Policy Research’s journal of politics, Mr Miliband has criticised the ‘inability of our economy to generate stable prosperity for the many, at the same time as creating spectacular rewards for the few.’

He said, “The economic crisis we have been living through began with the implosion of financial markets in Wall Street and London, causing a sharp economic contraction that rippled across the globe, triggering recession and unemployment.

“To prevent the same thing from happening again the British economy needs to be balanced differently, we cannot rely on financial services for growth and tax revenue to the extent that we did before; to increase our resilience, Britain needs broader-based growth.

“That means a more vibrant and innovative manufacturing sector which can take advantage of our comparative advantage in high-skill, high-value advanced manufacturing sectors like aerospace and automotive, pharmaceuticals and low-carbon technology.”

The Leader of the opposition has also stated his belief in the need for the British economy to focus more on long-term, productive wealth creation than on the predatory, short-term speculation that was at the root of the financial crisis.

He added, “Simply put, short-termism kills responsible capitalism, we need a culture shift in some of our major businesses, with CEOs, boards and shareholders all looking more to the future than demanding an immediate return in each quarterly report.”

However the Labour’ Leaders demand for more a responsible form of wealth creation comes amid news that the British economy shrank by a greater degree than had first been feared in the first quarter of this year.

Figures from the Office for National Statistics had previously estimated a contraction of 0.2 per cent for the first three months of this year.

However numbers released on Wednesday showed that the economy had actually shrunk by 0.3 per cent, indicating that the recession could be deeper than had first been feared.

A worse than expected downturn in the construction sector, which has been blamed on the Coalition’s continuing cutting in public infrastructure has been cited for the increased contraction.

The Construction Products Association, which represents more than 80 per cent of the building materials industry, has estimated that there will be no economic recovery in its sector until 2014, unless the government eases it’s strict austerity measures.

Recent research for the Fair Fuel UK action group and carried out Centre for Economics and Business Research has suggested a link between a fuel duty cut and economic growth.

A spokesperson for the CEBR said, “Our research suggests that a 2.5 pence reduction in fuel duty would result in the creation of 175 thousand jobs within a year and 180 thousand jobs within five years of such a reduction.

“Such a reduction, we estimate, would not result in any fiscal loss to the Government, while GDP would receive a boost of 0.32 per cent within a year and 0.34 per cent within five years.”

“We find that a more significant 5 pence reduction could generate an additional 200 thousand at a net annual cost to the Exchequer of around £1.2 billion within a year, which would fall to £1.0 billion per annum within 5 years.”

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