Our Government is facing an economic dilemma. On the one hand it is pursuing a policy of reducing government expenditure in order to pay back some of the national debt. On the other hand in order to avoid some of the negative effects that such a policy may have on the rest of the economy it is also pursuing an economic growth policy. I do not intend to get into deep economic arguments in this short article such as the effects on money supply and other issues. I shall simplify by focusing only on one simple question. What do we have to do to achieve economic growth at the national as well as at the local level.
A recent research has shown that we may have something in the region of 10%-20% slack in our production capacity. This means we can achieve an economic growth of 10%-20% simply by increasing demand and making our existing means of production (labour and equipment) better utilised. But how can we increase demand? Let us examine the so called aggregate demand economic function to see if we can get some useful ideas.
e = f (c + i + g + (x-h) this can be explained as:
(e) - Aggregate demand depends upon:
(c)-Consumption by individuals and households) plus
(i) -Investment which is the demand of goods by firms; this includes fixed investment mainly in machines and buildings together with inventory investment i.e. raw materials and work in progress together with finished goods in stock) plus
(g)-State expenditure which involves the State and its agencies buying goods and services such as hospitals, roads, new train lines, equipment for the army etc, but excludes transfer payments such as pensions) plus
(x-h)-Net exports i.e. exports less imports).
In simple terms the aggregate demand formula does gives us some basic ideas of what we have to do to increase demand in our economy.
Let us now examine how can we implement the aggregate demand in our locality.
Action by local people i.e. you and me as customers:
Make a conscious effort to buy from local shops and businesses. If you wish to buy something that is not available locally or the price in your view is too high inform the Parish Council. The Business Committee will raise it with the appropriate businesses. The aim here is to create a contact between local suppliers and local customers.
Action by Local Businesses:
Action by Parish Council
Local Businesses, purchase from other local businesses and employ local people. Adopt a training programme for local employees. Co-operate with local authorities and local organisations. Expand your business locally. Adopt technology and systems that will help you to increase sales.
Local Authorities should support local businesses. Provide good parking facilities. Buy locally. Invest in tourism. Use the taxation system to attract new businesses. Use the planning system to support local economy. Invest in training. Influence central government to invest in local capital projects. Attract central Government services in local area. Simplify systems and procedures that affect businesses. Support the use of local facilities such as Birmingham and Coventry airports. Adopt a sound transport system with good quality railway stations. Actively support manufacturing. Ensure policies are not inconsistent with one another.
Local Business should market local products/services and export them outside our region and overseas. Consider introducing internet marketing and sales. Local Business and Customers: Buy British and be loyal to UK plc.
The above list of things to do is not exhaustive and any other ideas from our readers will be gratefully received. Economic growth is not something that can be achieved by one person or organisation. We have to work together to make it happen. In Henley Ward your County, District and Parish Councillors work together and the local Business Committee is now being expanded with partnerships to work specifically for local economic growth and jobs. Join it and support it.