CBI: 50 YEARS OF BUSINESS INNOVATION | THE BIG PICTURE


BRITAIN’S DRIVE TO REMAIN IN THE ECONOMIC ELITE


UK MACROECONOMY


The UK is one of the 10 largest economies in the world – a position it has held fairly consistently over the last five decades. Yet that apparent stability hides a myriad of structural and cyclical changes that have buffeted Britain and put pressure on businesses and the CBI to respond.


Delivering strong and consistent economic growth is one of any government’s most important responsibilities. If real income in the UK grows at 1 per cent a year, it will double in 70 years; if it grows at 3 per cent, it will double in just 24 years. It is this phenomenon that led Nobel laureate Robert Lucas to declare: “Once one starts to think about [growth], it is hard to think about anything else.” British governments of all main political


persuasions are united in seeing their role as one to steer the country towards growth, and the CBI has been determined to act as the evidence-based voice of business during good times and bad. Fifty years ago Sir Maurice Laing, the first president of the newly formed Confederation of British Industry, said in its inaugural 1965 annual report: “By far the greatest problem that faces the new government is the efficient management of the economy and taking of the necessary steps, however unpalatable, to bring the economy under control.” Almost half a century later Sir Mike Rake, the


CBI’s president, wrote in the 2013 annual report: “It is critical that the benefits of our recovery now start to be shared by everybody in the UK. We will continue to use all our endeavours to ... see that the interests of industry – which are also the interests of the nation – are constantly kept in front of the government.” The language and the context may have changed but the concerns are similar. The long- term growth rate of the UK economy between 1965 and 2012 at around 2.5 per cent has been lower than many other capitalist economies over that period. The recent recession is a reminder that the economy is subject to swings between boom and bust that wreak havoc on growth, wealth, jobs and the lives of ordinary families up and down the country.


BOOM AND BUST Although growth was strong and stable in the two decades after the end of the Second World War,


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