Andy Haldane has a simple but stark message for those looking to replace Boris Johnson as prime minister: Britain has serious economic problems and they won’t be solved by massive tax cuts.
Nor, according to the man who until last year was chief economist at the Bank of England, does the solution to Britain’s cost of living crisis lie in the decisions Threadneedle Street makes about interest rates.
Haldane moved to lead the Royal Society of Arts (RSA) think tank through a stint in the Cabinet Office, helping to draft Johnson’s White Paper on equalisation. Although there will soon be a new face at No 10, Haldane says the next prime minister should not just stick to the rate hike agenda, but step it up.
Speaking before Johnson announced he was standing down, Haldane said: “The solution to the growth conundrum and the solution to the cost of living crisis lies squarely with the supply side of the economy.”
If the labor supply is gone, the productivity engine must be fired. The arithmetic of growth really is that simple, Andy Haldane
He says Britain has “long-standing, deep-rooted and structural” economic problems and warns that regularly chopping and changing the program to restart the country’s sputtering growth engine is not helping.
“What we need is the scale, duration and coordination of a plan. This has never been more necessary – and right now we really don’t have it.”
Regional economic resurgence is at the heart of what makes Haldane work. Whether it’s called leveling up or given another name doesn’t matter to the economist, who grew up in the Leeds suburb of Guiseley, a former milling town known as the home of Harry Ramsden’s fish and chips and Silver Cross pushchairs.
“When I was growing up, Bradford and Leeds weren’t quite as equal, but not far off. But over the last 40 years, Leeds has hit the afterburner, while Bradford has kind of stuck around,” he says. “There is a stir in Bradford now. It is mobile and has the status of a city of culture [in 2025] will put the rocket boosters behind it.
Haldane criticized the government for not putting more force behind one of its flagship policies. “You won’t be surprised to hear that it pushed me to go further, faster,” he says of the time he helped develop the strategy for Michael Gove, the former level secretary, while on a six-month loan from RSA.
With economic growth slowing and inflation at its highest in four decades, calls for new ideas that can pull Britain out of its downward spiral are about the only thing that isn’t in short supply. With acute shortages of workers and raw materials weighing on growth, Haldane’s analysis of where things go wrong is stark.
Rising employment – helped by migrant labour, people staying in work longer and more women participating in the workforce – has been the only driver of economic growth since the financial crisis of 2008. Meanwhile, productivity gains – when companies increase output by more -little or the same input of resources – stopped as business investment dried up.
However, the growth engine is stalling due to shocks in the labor market – due to the departure of older people during the pandemic and from Brexit, which affects EU migration. “This is among the causes of the cost of living crisis. This is a key source of the supply-side shocks we are witnessing. If labor supply—that engine of labor—is gone, we need the engine of productivity. The arithmetic of growth really is that simple.
CV
Age 54 Family Lives in South London with his wife Emma Hardaker-Jones, who is Human Resources Director at Legal & General. They have three children and a dog. Education BA Economics, Sheffield University; MA in Economics, University of Warwick. Last holiday deal, on the Kent coast. Best advice he ever gave “Early in my career at the bank, I lamented the way things were done. The guy said to me, “What are you doing? You are part of the bank. If it doesn’t work, just change the bank. It was such an obvious point, but of course absolutely true.” Biggest career mistake “I’ve made a lot and I don’t apologize for it. I hope I’ve learned from them.” The words White Paper overuses. How he relaxes Walking the dog and watching cricket, his favorite sport. “There is no better way to relax than to sit and watch cricket on a sunny summer evening.”
Haldane was born in Sunderland and is proud of his roots. At home, he has a signed photograph of the great save made by Jim Montgomery, the Sunderland goalkeeper, in their shock win over Leeds in the cup final in 1973. More recently, his hometown led the way in the 2016 Brexit vote, a topic , on which Haldane is unusually silent.
Asked whether Brexit was a threat or an opportunity, he said: “It depends on what you do with it. Both are promising. I obviously chose not to give an opinion.
But failure to confront Britain’s problems and boost productivity after a decade of lagging behind economic rivals – and with deep regional divisions – will have serious consequences: “Without a supply-side strategy, the economy will not grow and the cost of living crisis will not to be resolved. It’s so simple.”
Haldane saw that this would increase inflation earlier than most economists, warning last year in characteristically colorful terms that the “beast of inflation” was returning after a sleepy few decades. Just over a year ago, his upbeat outlook on economic growth led the Daily Mail to dub him “Mr Boom” as he warned of “Chicken Licken” pessimism dragging the country down.
Despite Haldane’s warning at the time that this was the “most dangerous time” since the UK left the European Exchange Rate Mechanism in 1992, his colleagues on the monetary policy committee did not heed his calls for higher spending on the loans.
Despite being touted as a possible successor to Mark Carney as bank governor, Haldane says he never aspired to the top job in Threadneedle Street. “Basically, I had done everything in the bank that I wanted to. I had done most things except print the notes. The job I wanted most happened to be the one I was doing when I left.
Having spent most of his career looking at big-picture issues, the 54-year-old at the RSA will focus more on the nitty-gritty: skills, investment and decentralization – where he believes the big challenges facing the economy lie .
“I haven’t missed him at all. I think what I’m doing right now is where the focus of politics should be.
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