into a global recession. as keynes correctly pointed out almost 90 years ago, you need to use fiscal policy to stabilise an economy when it s facing economic weakness. but you are correct. the problem with debt makes the outlook very sensitive to that growth and interest rate picture. so what one really needs to do is try and turn the whole picture around and ask, what is it that s required? and you could apply this to france and germany and italy as well as britain. what s required to change what has been the picture since 2008? since 2008, britain has been a low growth, low productivity, low wage and, in recent years, high tax economy. now, if you basically have austerity or tax increases against that backdrop, it s like being in a hole and digging deeper. so the correct question to be asking is how you actually turn it around. indeed. but what is not correct is to undertake a sort of, as you would put it, or as liz truss would certainly
to be a much more open, resilient, unregulated. ..deregulated economy and that would help us in our wider trade relationships. but let s go back to china, which you care so much about. german trade with china dwarfs uk trade with china and the gap between the two has actually grown since brexit. it s more than three times now more trade that germany does with china germany, of course, an eu member than the uk does with china. the uk, according to you, freed of all the constraints that came with the eu. so how can you tell me that the uk s global trading performance and potential has been improved by brexit? all right, look, brexit does a lot of things. it provides political, economic and financial ability for the uk to reposition itself. the political aspect is very important in terms of greater democratic accountability, freeing us from a movement towards a greater political union. the big problem in the uk has been in terms of. do you think, in beijing, they seriously think, you
the four is. 0n investment, it s notjust investment in plant and machinery in particular, it s investment in skills and training. in terms of productivity in the uk, half the people work in low productive, low wage sectors, but they are only in about five different industries, including retail, hospitality, food services and a couple of others. but the point is, when you look at the data, most people in those low skilled jobs have not had ever money spent on their skills and training. so what the government should be doing is trying to incentivise or help firms to invest more, notjust in plant, in machinery, but in skills and training. that s key. now, the uk does have. so you need to use government in a very active, interventionist way in the economy to actually direct investment to the sorts of things which will boost long term productivity. the government can t pick winners. that s the thing. tell that to the french, maybe the germans, because they believe from time to time the go
gerard lyons. he s long been an optimist about britain s prospects in the global economy. but at what point does optimism look like delusion? gerard lyons, welcome to hardtalk. thank you. great to be here. it s great to have you here. would you agree with me that you ve tried in recent years very hard to look on the bright side when it comes to the uk economy through brexit, through all sorts of different challenges, including the pandemic? are you struggling right now to be optimistic? well, actually, i wouldn t call myself an optimist. i tend to try and be realistic
since then, you ve advised borisjohnson, you are very well known in recent times for giving quite a lot of advice to liz truss, who of course we must remember was only in power for a few weeks but nonetheless had a serious impact on the economy. and we can talk about that because her so called mini budget was perhaps the single most disastrous piece of economic policymaking we have ever seen in the uk. and you were advising her up until she issued that mini budget. 0k. well, let s be straight. i did see liz truss twice before she moved into downing street, when she was foreign secretary. so i didn t actually speak to her or meet her after she went into downing street. and indeed, i didn t meet her chancellor or any of her ministers, so i was very much outside the tent. as a sort of leading economist, i m often asked, as you ve correctly pointed out, by politicians to actually give my thoughts about the economy. so i think it s very important to differentiate between being on the outsid