Posted by on September 7, 2017 6:45 am
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Categories: Anglican Church Austerity Bank of England British people Business economics Economy headlines John Maynard Keynes Justin Welby Keynesian economics Lords Spiritual Monetary Policy Quantitative Easing recovery

While the world has grown used to The Pope sticking his papal nose in the world’s business (“horrrific” borders, “grave risks” of libertarians, and the virtues of socialism); Britain’s most senior clergyman, the Archbishop of Canterbury, has now decided that it is not enough to preach His word, but better to use his position of influence and adulation to discuss what’s wrong with capitalism…

The British economic model needs fundamental reform.

It is no longer generating rising earnings for a majority of the population, and young people today are set to be poorer than their parents. Beneath its headlines figures, the economy is suffering from deep and longstanding weaknesses, which make it unfit to face the challenges of the 2020s.

Fundamental reform has happened before, in the 1940s and 1980s.

The persistent economic problems we have experienced since the 2008 global financial crash demand change of the same magnitude now. This should be guided by a new vision for the economy, where long-term prosperity is joined with justice for all.

The Most Reverend Justin Welby, writing as part of a new report from think tank, the Institute of Public Policy Research,  said that Britain’s economic system is effectively not fit for purpose, benefitting the haves (to the detriment of the have-nots).

“Our economic model is broken. Britain stands at a watershed moment where we need to make fundamental choices about the sort of economy we need,” Welby said in comments released as part of IPPR’s “Time for Change: A New Vision for the British Economy” report.

“We are failing those who will grow up into a world where the gap between the richest and poorest parts of the country is significant and destabilising.”

The solution – simple – spend more ‘government’ money, end fiscal austerity, and maker sure everyone ‘pays their fair share’ – sound familiar?

We have experimented with bold monetary policy, but are constrained by pre-Keynesian fiscal orthodoxy. Since the financial crisis, the UK economy has been supported by extremely low interest rates and a major programme of ‘quantitative easing’ (unconventional money creation) by the Bank of England.

Fiscal austerity – public spending reductions and tax rises – has left the UK’s recovery in this period slower than almost all of our major competitors.

Growth is now being fuelled again by consumer spending, based on rising debt and falling savings. With monetary policy having little further scope to deal with a slowdown, there is a strong case for increased public investment now to drive demand.

Archbishop Welby’s comments are by no means the first time he has intervened in the UK’s economic debate. As BI reports, Welby famously said in 2013 that he would effectively help to try and put much maligned payday lender Wonga out of business, by assisting credit unions which compete with the firm. Welby – who worked in the oil business before becoming a clergyman – was later left embarrassed after it emerged that the Church of England had investments in funds which provided money to Wonga.

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Full IPPR Report – “A New Vision for the British Economy”

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