How can Britain stage an economic recovery after the Brexit crisis?

From his booklet, ‘Beyond Brexit: Liberal Politics for the Age of Identity’, Liberal Democrat leader Vince Cable explores how the UK can prosper socially and financially in the 2020s

Economic competence is not a message that stirs the soul but, without it, rising living standards are not possible (Getty/PA/The Independent)

Without an effectively functioning economy, such objectives as “fairness” cannot be realised, and political extremes flourish. What Britain needs to prosper socially and financially in the 2020s is a longer-term strategy for sustainable growth which addresses the country’s deep failings in respect of skills, short-term financial horizons and housing. And, now, those of us who oppose Brexit and economic nationalism generally face the challenge to say how we would improve the functioning of an economy damaged by the financial crisis and then, again, by Brexit. Good economic management will be more critical than ever.

In the late 1960s and 1970s Britain suffered from “stagflation”: rates of inflation well above historic trends and occasionally reaching double figures (leading to a balance of payments crisis under a fixed exchange rate system) combined with slow growth relative to developed-country comparators.

What followed was a revolution in policy terms which came to be known as “Thatcherism” (with similar reactions elsewhere, notably the US): a fundamental switch from state ownership and controls to much greater faith in private ownership and market freedom (and with it, toleration of greater inequalities); independence for central banks to control inflation; fiscal rules to stop the build-up of unsustainable deficits and debt; and full-blooded engagement with an open “globalised” economy through trade, financial markets, international investment and (to a degree) migration. The Blair/Brown era of Labour government cemented this transformation.