The World Cup brings us together, shouldn’t economic policies do the same?

4 July 2018

By Charlotte Alldritt

6 minute read

What difference two years can make. In 2016 the England men’s football team had crashed out of the Euros, humbled by an inspired Iceland– representing a population no bigger than the size of Croydon. As fans prepared themselves for the prospect of yet another defeat on penalties this week – this time in the last-16 of the 2018 World Cup – Ian Wright, Gary Neville and Lee Dixon summed up the victory: “the nation needed this [win on penalties]”. A cause for unbridled celebration and fingers crossed for Saturday against Sweden.

So much seems to have changed. Only two years ago the UK was the fastest growing economy in the G7. It was also the moment that a majority of the electorate voted to leave the European Union – an expression, in part, of deep economic, social and political discontent and disempowerment.

The roots of this discontent went back a long way, to the financial crash ten years ago and to decades of persistent income, wealth and health inequalities following de-industrialisation. Here Sweden, our sporting opponent at the weekend, is often the source of inspiration rather than nervous anxiety. Despite experiencing a rapid increase in inequality during the 1990s, Sweden still ranks as one of the most equal of advanced economies in the world with a disposable income Gini co-efficient of 0.274 compared to an average 0.318 for the OECD. On the surface it might seem, perhaps, the archetype of an inclusive economy.

Inclusive growth, and the ideas and concepts emerging from it, represent a fundamental reassessment of our economic principles, priorities and assumptions – and a response to disaffection.

A year ago, the Inclusive Growth Commission, chaired by Stephanie Flanders, and which I directed, published its final recommendations. The following day in his Spring Budget statement, the Chancellor addressed many of the concerns that had come to define the post-Brexit political context: productivity and prosperity had to be coupled with fairness, both for those in work today and for the next generation. Will people have the skills to adapt to a changing economy, perhaps many times during their working lives? Will they be able to get on the housing ladder, or to save for a pension? Investment in education and skills, said the Chancellor, is the key to inclusive growth – to an economy that works for everyone.

Since then the UK has fallen to the bottom of the G7 growth table, representing a challenge to central government policymakers as to whether they will relegate distributional or structural concerns in pursuit once again of headline GDP figures.

This challenge also applies, often more starkly so, to local leaders, many of whom have shown they are determined to embed inclusive growth at the heart of their place strategies. There is now a range of institutions and other system and structural changes emerging, each of them trying to tackle deeper causes of economic, social and political discontent, while trying to maintain and enhance their competitiveness at the same time.

The UK is not alone in wrestling with these challenges. India, South Africa and other middle and low income countries are striving to find ways to make inclusive growth a reality. Even in Sweden local and central government leaders continue to grapple with rising inequalities and mounting social and cultural concerns associated with immigration. How far should inclusive growth principles extend, and how might they be realised against a complex and fast changing political and demographic backdrop?

It is in some ways a relief that the concept of inclusive growth still excites controversy – it is evidence that this is a real shift, not an anodyne or cosmetic one. But there is an argument raging, and from all ends of the political spectrum.

There are the inevitable doubts about whether cities can handle the complexity of inclusive growth. While I was recently in Chicago, it was hotly debated whether any economic opportunity or job was better for disadvantaged racial minorities in that divided city than the mere hope of finding good work. The promises of an inclusive economy by local leaders (themselves often comfortably well off) rang hollow, despite the old ways of measuring and pursuing economic growth having failed to deliver for so many of Chicago’s communities.

These are important debates. Through the Centre for Progressive Policy (CPP), I am now working in Chicago, with local leaders in the UK, and with central governments and international non-government organisations around the world. This work already suggests several key questions that need to be answered:

  • Can inclusive growth be achieved under the existing economic principles, systems and institutions? If not, how much of a radical departure from existing economic thinking is needed?
  • What institutional structures, tools and interventions are shaping inclusive growth in policy and practice? How are successes being measured and evaluated?
  • How can we work with business and industry so that inclusive growth is central to how firms operate and engage in society? Which firms are leaders in this already? What role would regulation or other incentives play in driving more systemic change?
  • To what extent might efforts to make inclusive growth an inclusive process – for example, through diverse and deep citizen engagement – be inherently limited, and to what effect? How can these limitations be overcome?

We are discussing these and other questions at a seminar at CPP on 11th July, which will feed into a series of publications on how we achieve inclusive growth. Watch this space and sign up to our newsletter to receive our latest updates, publications and event invites.

The image used is by Hollygraphic