davos was an excellent reminder to attendees and observers that politics and economics have an awkward relationship. Politics and politicians like to believe they are the dominant party in the relationship and then ever so often economics comes along and reminds them they are not. The truth of course is that both need each other and both should be wary of each other and not take the other for granted.
Valentines day is next Monday and it would be a good idea for politicians in the UK to remember their relationship with economics on that day and that without strong policies promoting economic growth, an awareness of global markets and a keeness to fight for economic investment to come to the UK, that relationship could decline or worse still come off the rails.
In the UK the new Government has taken the right but difficult first steps to reduce the deficit and put the UK public sector on a firmer footing. The next challenge is to promote economic growth in the private sector and again reaffirm the UK is open for business.
Over the weekend we again saw Labour only talk in negatives. The cost of cuts, the need to tax more, the need to stop “fat cats” and “loopholes”, the need to blame everyone else or create any bogieman they can to shift the blame from the previous Labour Government for overspending and getting us into the huge deficit in the first place.
It is a further tax and spend approach that would lead to the UK closing in on itself, to global economies and business seeing us again as the sick man of Europe, to the relationship with inward investment and global entrepreneurs breaking down and ultimately UK plc falling behind.
What we need and what the Government must hold its nerve to do, is keep to the positives, focus on the economics, show the UK is open for business and encourage inward investment and help businesses and entrepreneurs choose the UK as the place to do business. It needs to help our home grown businesses and talent compete in the world economy by reducing costs and red tape and ensure we keep taxes low and eventually cut them to encourage enterprise.
It is tempting to sometimes let politics solely dictate the agenda and put economics to one side, but the last Labour Government showed what happens when politcians do this and it wouldnt be a good idea to listen to them now.