Letter to Prospect

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November 26, 2012 by johnmillsjml

The Letters Editor

Prospect

2 Bloomsbury Place

London

WC1A 2QA

In your October 2012 issue, Gavyn Davies recommends three ways of stimulating the economy: reducing taxes, spending on infrastructure and getting more money lent to companies. All three may be possible without destabilising the markets and may therefore help to avoid more austerity. None of them, however, does anything to deal with the UK’s fundamental problem which is our inability to pay our way in the world. We cannot do much to expand the economy or avoid very high unemployment because our external payments position is so weak. Only manufactured goods can plug the gap and to make our exports sufficiently competitive we have to have a much lower exchange rate – maybe $.20 to the pound. Targeting inflation at 2% is the wrong goal. Getting the pound down and then maintaining it at a level which makes growth and full employment possible again is far more important.

Yours faithfully,

John Mills

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