Need for speed must be part of Andy Burnham’s economic argument
By Simon French, Chief Economist and Head of Research
Which ‘P’ is the most underappreciated element of a vibrant and prosperous economy? I have previously made the argument in this column for it being prices and the important signals that prices throw off. Poverty and profit make strong, if very different, cases. Power and planning also deserve a look in, given their relevance to a healthy supply side of the economy. But today I will make the case for pace. Specifically, the increasing evidence that what ails UK - and Europe’s - economic performance in recent years, at least relative to the US and China, has been a lack of pace in nurturing and supporting economic growth.
Pace is a hidden cost for businesses and households. Time is not a costless commodity, even if it does not directly issue invoices. Whilst the phrase “move fast and break things” is attributed to Facebook’s Mark Zuckerberg, it is a broader cultural trait in the technology sector. Space - the underpinning concept to the world’s most valuable stock market floatation, SpaceX - has always been seen, poetically and geopolitically, as a race. The ‘space race’ is, if anything, speeding up backed by huge quantities of investment. The battle between China and the US for primacy in AI is a sprint for network dominance. To underestimate the pace component would be to misunderstand modern-day economics, and the huge advantage of networks developed at scale and at speed.
But away from the productivity frontier, pace is also hugely important in more traditional economic endeavours. From retail to construction, from legal judgements to health services. The cost of undertaking any economic activity is not just the resources required, but the period that these resources are required to stand idle. Time is so often the hidden cost, and the impediment to growth.
In Europe, former ECB President, Mario Draghi, noted in his scathing 2024 report into European competitiveness that “Citizens and companies (...) are disappointed by how slowly the EU moves. They see us failing to match the speed of change elsewhere”. The European peace dividend after the end of the Cold War was spent on luxury layering of economic processes. This looks like a seismic mistake – rather than fostering the hustle and innovation so often necessitated by having an existential threat on your doorstep. The technological innovation, particularly on drones and modern warfare techniques, that is now pouring out of Ukraine is instructive on how lack of pace is not a precondition from being on the European continent. Moving slowly is simply not a luxury that Ukrainian leaders can afford right now.
In the UK, the penny is dropping for the Labour government. In the aftermath of the local election defeats in May, Prime Minister, Sir Keir Starmer spoke about “lives not changing fast enough”. That is the right rhetoric. But when tacking back to policy there are areas where the pace remains lamentable. Whilst there have been recent encouraging signs on major infrastructure projects being fast-tracked and exempted from tactical lawfare from opponents, this cultural trait runs much deeper. It has been building for decades under governments of all colours.
A lack of pace is apparent in the COVID-19 inquiry. It will be close to 60 months from the inquiry’s inception before the final reports will be published next year. This compares to an average of less than 17 months amongst other countries that undertook public inquiries. Japan concluded its own COVID inquiry in 4 months.
It is at least three decades since the debate over Heathrow airport runway expansion began. To date not a yard of tarmac has been laid. Ongoing Commissions into the future of Social Care and Pensions will take years to report despite everyone close to these issues being aware of the policy imperatives, and tradeoffs. It speaks to governments who play for time, rather than grasping the nettle. The Defence Investment Plan is another timely example. Threats from Russia and China are emboldened by ponderous indecision. And whatever ones view on approving new North Sea oil and gas developments, the fact these decisions have sat on the Secretary of State’s desk for two years without action is pathetic.
In Westminster it has been a Spring of essays from a range of Labour-adjacent thinkers on what happens to Labour’s central economic mission should Starmer be replaced. There is a real danger that, for all their merits, some of these essays have over-intellectualised the issue. Conversations about policy, delivery structures and ideologies sound great in politics tutorials, and thinktank events. Back in the commercial world, pace is a key determinant of who grows market share.
Manchesterism, the ideology most associated with leader-in-waiting Andy Burnham, talks about benefits from tighter state control as two-fold. First, a lower cost of financing – where the arithmetic is becoming increasingly questionable given the elevated costs of UK public sector borrowing. But second, and perhaps more interesting, is whether the layering of approvals, regulation, and co-ordination of delivering utilities, transport and housing by the private sector is driving the lack of pace of efficient and speedy provision.
Here this Manchesterism school of thought may be onto something, albeit it requires a clearer exposition of why the regulatory model has stopped any reservoirs being built in the UK for thirty years, why the UK has the highest cost of high speed rail in the world, and has delivered half the rate of housebuilding across the G7. For each argument from Team Burnham that talks of the cost of neoliberalism, there is at least an equal argument that is has been the failure of state-led architecture to legislate, prioritise, and regulate appropriately. The best that can be said is that the case for greater state control on delivering pace and efficiency of provision of important staples is unproven. If Burnhamism is going to have any national relevance – and the constituents of Makerfield get a say before anyone else – this case needs to be made.
And larger than just UK politics is the risk that the most pressing technology challenge of our times, the adoption of AI, runs into the problem of pace. Scaling AI capability will require deep pockets of cheap capital, abundant and cheap energy, as well as planning and labour market flexibilities. These look more like an Achilles heel for the UK, than a comparative advantage. For all the quality of UK intellectual property in AI, if converting that into viable businesses cannot be done at pace the UK will stay a laggard. The US government decision in recent days to restrict foreign access to Anthropic’s Mythos 5 model is a timely reminder that relying on the infrastructure of others, even traditional allies, risks vassalage.
Pace has been one of those economic features that gets insufficient attention. External events like warfare and pandemics demand pace, and drive rapid innovation. Far better to cultivate it in peacetime. That peacetime clock is ticking down.
