Britain to Build "New Economy" with Increased Productivity and Competition

Gordon Brown, the Chancellor, emphasized the need for Britain to develop its own "New Economy," which would require increased productivity and competition. In a Mansion House speech, Brown stated that Britain cannot rely solely on the advances in information technologies to drive economic growth, as seen in the United States. Instead, the country needs to raise its game and invest in education and innovation to equip its workforce for the challenges of the modern economy.

Key Takeaways:

• Britain needs to develop its own "New Economy" to drive economic growth, rather than relying solely on information technologies.
• The Government will introduce measures to boost productivity, including reducing corporate tax rates, providing interest relief for investment overseas, and increasing competition in key sectors such as utilities and telecoms.
• The Chancellor emphasized the need for education and innovation to equip the workforce for the challenges of the modern economy.
• The Bank of England's Governor, Eddie George, warned that the effects of the "New Economy" in the UK are uncertain, but hinted that interest rates might be at their peak.
• The Government has already taken measures to boost investment, including reducing the long-term rate of capital gains tax and introducing share-incentive schemes.
• The utilities, energy, e-commerce, and telecoms sectors will be targeted for increased competition, as well as the professions.
• The Chancellor praised the Bank for delivering low inflation and high and stable growth, but emphasized that the UK needs to do more to catch up with the US in terms of economic performance.

Statistics:

• Output growth has exceeded inflation five times in the past seven years.
• Employment is at a record level.
• Interest rates have been more stable in the past.
• The UK's economy is "in pretty good shape," according to the Bank's Governor.
• The share prices have shown some of the "froth" has going, reducing the risk of a sharp correction.
• The imbalances in the world economy are receding, but there is still a long way to go before a more sustainable balance is achieved.

Sources:

• "Britain cannot assume ... that the new information technologies will automatically bring the higher productivity growth now seen in the United States." - Gordon Brown, Mansion House speech
• "We can't be confident about the effects in this country of the New Economy." - Eddie George, Bank of England Governor
• "Domestic demand growth will need to moderate ... although there are some tentative signs in the recent data that it may be beginning to do so." - Eddie George
• "We are determined to build on our lower corporate tax rates and the interest relief we give on investment overseas, and make Britain an increasingly attractive environment for multinational companies." - Gordon Brown
• "Continuous and rapid innovation in our technologies will compel unprecedented flexibility and adaptability in skills and knowledge." - Gordon Brown
• "We, in this country, must fervently hope that the seeds of this technological modification are blown in our direction and find a receptive environment here." - Eddie George