Five ways to boost the economy

Boris Johnson © Toby Melville - WPA Pool/Getty Images

Boris Johnson is fond of a hard hat

(Image credit: © Toby Melville - WPA Pool/Getty Images)

published 9 August 2020

There’s nothing Boris Johnson likes more than to be photographed with a hard hat breaking ground on a new building project. As mayor of London, there was rarely a skyscraper, airport or tunnel Johnson didn’t want to start work on. As he looks for ways of reviving an economy that, even as lockdown has eased, is still in the middle of its worst slump for a century or more, it was always inevitable that lots of construction would take the lead on creating new jobs and more demand. With its massive deregulation of planning rules, the government is hoping to start a building boom that will lead us out of recession.

That’s all to the good. A construction boom helped us out of the Great Depression. The UK has some of the tightest planning rules in the world and some of the most inefficient. If we can use this crisis to push through the reforms to fix that, so much the better. But why stop there? If deregulation will liberate the building industry, why not the rest of the economy too? Here are five places we could start.

The only real growth as we recover from this epidemic is going to come from the gig and hustle economy. Lots of high-earning self-employed professionals could be a lot more effective if they took on an assistant. But they don’t because it immediately traps them in the whole nightmare of employment law and tax and pension regulations. It would be easy to exempt the first employees from all those rules. Likewise, how about a £5,000 tax-free hustle allowance that allows people a side gig they don’t have to pay tax on? Both would create jobs.

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Our tax system has become so cluttered with rules that it stifles investment. From patent boxes to research and development allowances, to tax breaks on films and farmland, over the last two decades successive chancellors have created a tax system that’s starting to collapse under the weight of its own complexity. Abolish five taxes in every Budget for the next four years and it would start to look a lot simpler.

The EU’s absurd rules on data privacy should go once the Brexit transition period ends. The big companies can afford to pay for all the systems needed to comply with them, but they hammer small businesses and start-ups, reducing competition and harming consumers. Beyond a few basic rules to protect privacy, we should turn the UK into the most open data economy in the world. After all, that is where the growth is.

We should also create a wave of innovation by encouraging new technologies. From flying taxis to driverless cars to vertical farms, robotics and lab-grown meats, there are lots of technologies edging their way into the market that could turn into huge industries very quickly. Most countries are being very cautious about allowing them to get started – the EU, for example, is insisting that artificial intelligence decisions are approved by a real person, which kind of misses the whole point as the purpose of AI is to make better and quicker judgements than humans do. If we reduce approval times the UK can be turned into a laboratory for new ideas – and investment will flood in.

Finally, we should speed up immigration. As we complete our departure from the EU we are already quite rightly reshaping our immigration system so that it focuses on skilled people from around the world rather than anyone who happens to have come from within Europe. But we also need to simplify the process. It is crazy that it takes a company two or three months to get a work visa for a skilled person they need to help grow their business. A week should be plenty. If we make the UK one of the easiest places in the world to assemble talented teams of people from around the world, that will be a powerful incentive to base a company in this country – and it will help our own businesses grow faster as well.

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Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.