Last night I gave a lecture to 300 professional and business people in the Sainsbury Wing of the National gallery. I presented my views on the true origins of the Credit Crunch and the continuing errors of monetary and fiscal management. No one in the discussion which followed queried my thesis that the Monetary and regulatory authorities were a central cause of the crisis – a view familiar to readers of this website.
Today people are at last waking up to the real threat that we will run out of power ere long, if cold winters coincide with modest economic recovery and if no more power stations are built quickly. This is something I have been warning about for years in the Commons, asking the government to make decisions about replacements for the ageing nuclear stations and the coal stations that the EU rules are closing. They have dithered instead of getting on with issuing the permits and licences required to replace them with more nuclear or something else. Our only option now to keep the lights on is to build some gas powered stations rapidly.
In the Economic Policy Review I repeated the urgency of sorting out this problem. We said “We also believe that government needs to provide leadership in tackling the large number of capacity problems and bottlenecks which have emerged in the UK’s ageing infrastructure. The UK may be an island of coal set in a sea of oil and gas, but it came close to running out of energy in 2006” “We examine ways in which private capital and competition can be harnessed to ensure more plentiful supplies of transport network capacity, of energy and water”. Two years later, and we are still awaiting some decisions which will allow the construction of new power stations.
I also see others are now revising their view of the UK’s long term rate of growth. I have long been saying that it is likely to be 1.5% rather than the 2.75% the Treasury claims. The higher taxes go and the more debt that builds up, the lower the long term rate of growth is going to be. At least if they do succeed in putting the lights out we wont see how bad its got.