It was during the EU Referendum that a woman from Newcastle uttered certain words, which perhaps sum up just what has been going so wrong with our country for so long. Anand Menon from the organisation UK in a Changing Europe, was speaking in Newcastle about leaving the EU and the GDP that would be lost, when a woman shouted out, “It’s your bloody GDP, not ours”. Menon has of course been proved right about the folly of leaving the EU in many respects, not least the loss of GDP as trade with our European neighbours has become so much more difficult, with British companies lost in exactly the kind of blizzard of red tape, Brexiters assured us leaving the EU would eliminate.
However, the Geordie woman did also raise an important, if somewhat uncomfortable point. As our society becomes ever more unequal, then it is perhaps little wonder that appeals based around avoiding lower GDP for the country as a whole, had little resonance with so many parts of the country, especially the North of England, which had already been so badly hit by austerity since 2010, when the EU referendum took place, and even more so now.
I was reminded of all this when I read a powerful article by former Archbishop of Canterbury, Rowan Williams. In the article, Williams writes that, “…when we hear politicians – and especially politicians of the left who are supposed to have some investment in the hopes and ideals just mentioned – appealing to the imperative of growth, we should be asking insistently what the word means, what we are supposed to be growing into or towards. So far, we have heard dismayingly little from government about how we are to develop towards a genuinely resilient society – resilient in the sense of being able to cope with unprecedented challenge without losing our commitment to one another’s wellbeing and safety.”
“The uncomfortable truth is that in our present global context, growth frequently means the opposite of such shared responsibility. Concerns about profit weaken accountability; the distance of workforce from decision-making reinforces alienation and insecurity. Who specifically wants this? Presumably those whose profits are most at stake. Is it that impossible to turn this into an argument for growth understood as the building of a durable tax base, with incentives to plough back profit into job creation?”
Economic growth does not mean economic equality
Much of this seems to be absolutely correct. Overall income inequality reached a high point in the 1930s, but then fell, remaining fairly static until 1979. Following the election of Margaret Thatcher as Prime Minister, inequality rose sharply from 1979 to 1991. It is noted by Equality Trust that “since 1991, the trend has been more volatile, affected by the Great Recession of the late 2000s and the Covid-19 pandemic in 2020. However, we’ve continued to see marked growth in the income and wealth taken by the very richest.”
The widening inequality since 1979 means that there have to be serious questions asked when politicians such as Rachel Reeves and Keir Starmer talk about the importance of economic growth. If the economy is dominated by big corporations and their shareholders, then it is easy to see just how much of what has passed as growth in GDP in recent decades has actually been of little benefit to working people.
Williams is correct to point out that the drive for growth seems to be about a few people becoming very rich, while any considerations of social responsibility go out of the window. Just thinking about GDP and not measuring wealth in any other way, such as wellbeing or how evenly it is distributed can hide a multitude of sins. If rising GDP just means that the very wealthy are getting even wealthier, while the rest of society find wages and income stagnating, then that is not the answer to either our economic or social problems.
At the end of the day, despite what Reeves and Starmer might like to think, growth cannot be an excuse not to redistribute wealth. In the last 45 years, we have seen only too clearly through the lie of ‘trickle down’; the idea that the rich getting much richer will benefit everyone eventually as the wealth somehow magically trickles down to benefit everyone. The growth in inequality clearly shows that to be untrue. Indeed, the time when the UK was becoming more equal, between 1945 and 1979, was also a time of stronger economic growth generally and a time of genuinely improving living standards.
As climate records continue to be broken around the world, it is surely also time to ask if traditional economic growth is a good thing anyway. We live on a planet with finite resources. July 25th this year has been calculated as 2025’s Overshoot Day, the day when humanity’s demand for resources exceeds what the planet can regenerate. In other words, everything we do after July 25th will be making it harder for future generations to live sustainable lives. In this context is traditional economic growth wise, or even feasible?
What kind of growth do we need?
The evidence seems pretty clear. We need to consider growth in different ways and we need to consider three major priorities:
Economic growth must be allied to redistribution. For 45 years now we have seen economic growth only really benefit the wealthy, while living standards for so many in our country have simply stagnated for the last 15 years. The woman in Newcastle who shouted out must feel that she is part of the nation and its GDP.
Secondly, growth should be calculated in a different way. We need to consider how people’s wellbeing is being affected and whether that is growing. It is clear that economic growth for some can mean diminished wellbeing for others. That cannot be acceptable and simply allowing the greed of certain people to continue unchecked, while adding it to the nation’s GDP as if it is all for the best, is simply not tenable.
Finally, any drive for economic growth must be environmentally sustainable. The reason for this is simple; any other growth from now on will not only be inappropriate, it will be impossible. Consequently, we must view the continual cutting of green initiatives by the present government with alarm. They seem determined to act as previous Tory administrations have done and kick the climate change can further and further down the road. The principles of sustainable growth are well documented in a wealth of writing about how a green new deal could work in the North and in the UK as a whole. It is time to return to those ideas with a real sense of urgency.
I look forward to a time when all our people can think of national GDP as their own, when it is also linked to the wellbeing of our people and when its growth is firmly placed within sustainable boundaries.
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