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The Elephant in the Room: Why UK living standards may be lower in 2030 than they were in 2019 or even 2007 and what we can do to stop this happening

John Mills, October 2020

Covid-19 has forced the UK into an economic crisis, generating the deep recession with which we are now faced. To bounce back, this book argues, we need a fundamental rethink about the economic policies that have caused us to deindustrialise and to allow the massive imbalances – from which the UK economy currently suffers – to accumulate. Above all, this means reassessing the role of the exchange rate as a crucial but almost totally neglected policy tool.

John Mills, the entrepreneur and economist, shows in this book why, in the face of all the available evidence, the economic policies the UK has pursued over a long period have hugely disadvantaged the regions across the UK. The result of this economic orthodoxy has left us with a reliance on the service sector and an economy deeply unbalanced, unable to pay its way in the world, with too much borrowing – and with mounting regional, inter-generational and socio-economic inequality.

This book provides some constructive and positive solutions to reverse the process of deindustrialisation and, by implication, make the UK’s exchange rate more competitive. The UK will need to make it profitable to site new manufacturing facilities, and this can only be done with a competitive exchange rate that is tailored towards the needs of manufacturing rather than services. Only by shifting our economy towards exports, domestic production, and investment-led growth can the UK bounce back from coronavirus impacts and achieve genuine economic growth.

“There is nothing new about Britain’s economic problems: we consume too much and produce too little; the balance of payments is in chronic deficit; regional imbalances are wide and growing. In his new book, John Mills sets out why these problems need to be tackled with urgency and how to do it.” – Larry Elliott, The Guardian

“This is an excellent book. John Mills provides a compelling case for the vital role that a competitive exchange rate can play in boosting the UK’s economic prospects and living standards. It is an absorbing and easy read, containing some powerful economic messages.” – Dr Gerard Lyons, leading UK economist

“The challenges facing the economy cannot be exaggerated. The coronavirus pandemic and the
Government’s policy responses, however justifiable, have hammered output. Unemployment could double
by the end of the year and public sector borrowing has exploded. At this crucial time, we need a wideranging and open-minded debate on policy and John Mills’ latest book The Elephant in the Room is an excellent contribution to such a debate. Read it and heed it.” –  Ruth Lea CBE, Arbuthnot Banking Group

“The pandemic and its aftermath are certain to lay bare and to show in even starker relief the fault lines that have afflicted the British economy for more than a generation, and that have left us in such a parlous state. John Mills identifies the endemic policy mistakes that have led us to this sorry state and sets out the steps we must take to achieve a better and more acceptable outcome. The time for action is now.” – Bryan Gould, former Shadow Chief Secretary to the Treasury

“The coronavirus crisis has only served to increase the importance of the key economic issues that have concerned John Mills for so long. He is one of our most radical economic thinkers. Now, more than ever, economists and policy-makers need to give his ideas serious attention.” – Roger Bootle, Chairman, Capital Economics

“It defies common sense that a Trading Nation should completely ignore the importance of the rate of exchange at which it trades – yet we have. Is it then not surprising that our economy has become unbalanced and our international indebtedness ever growing. John Mills’ timely solution should be compulsory reading by every politician.” – Lord Vinson, former businessman and winner of the Queen’s Award for Industry

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