Professor Nick Crafts summarised the economic policy lessons from the 1930s and 1980s that are relevant to kick-starting recovery now, at an RES Policy Lecture in London on 17 October 2012.
If fiscal consolidation continues and radical changes to monetary policy are ruled out, it is mainly ‘supply-side’ reform that can restart UK growth without doing longer-term damage to the economy. Among other things, that means repairing infrastructure, improving education, reforming taxation and tackling the restrictive planning system.
But one area that could deliver both short-term stimulus and long-term efficiency is private house-building – as happened in the 1930s recovery from recession. Today’s planning restrictions mean that the stock of houses is three million below and real prices are 35% above what they would be if market forces operated freely.
These are among the conclusions of Professor Nick Crafts on what policy-makers can learn from the 1930s and 1980s, when the UK economy made strong recoveries from severe recessions very similar to the current one. Despite fiscal consolidation, both the 1930-32 and 1979-81 recessions were followed by strong recoveries.
Delivering the Royal Economic Society (RES) annual policy lecture in London on Wednesday 17 October 2012, Professor Crafts summarised the policy lessons from those decades that are relevant to kick-starting recovery now - More
Source: RES Office, Amanda Wilman