By Vivienne Russell | 7 October 2013
Sterling should be allowed to fall in value to get the UK economy growing in line with the world average, according to a pamphlet published by the Civitas think-tank.
Devaluing the pound by about a third would make exports more competitive and reduce unemployment to 3%, said the pamphlet’s author John Mills.
Mills, who chairs an import-export company and is a major donor to the Labour Party, said: ‘We clearly need to set an exchange rate that is sufficiently competitive to help us recover our export capacity and ability to pay our way in the world.
‘This would help us get back to a growth rate of 3% to 4% per annum – about the world average – and to get unemployment down to perhaps 3%.’
He also argued that cutting government spending is more likely to reduce gross domestic product that the deficit because it takes demand out of the economy.
‘It may well be the case that government expenditure is uncomfortably high as a percentage of GDP and well in excess of the income available to finance it, but the way to tackle this problem is not to cut public expenditure. It is to improve business and consumer confidence and to get the foreign payments deficit under control.’
Mills makes his case in A competitive pound for a stronger economy, published by Civitas today.
