The Global Economic Challenges - Where do we go from here?

Summary note

The British Academy Forum on 16 November 2009 sought to evaluate the current state of the global crisis, to assess the effectiveness of actions taken by governments, and to consider what next needed to be done.

In a wide-ranging discussion, the view was expressed that the British recession might not be as severely damaging as had been feared in some quarters. There would be short-run effects because of the banking system, but ‘trend growth should hold up reasonably well’: ‘it will undoubtedly appear many years in the future that the extent of the UK recession has not been as bad as perceived.’ And the Forum was reminded of the long-term advantage that Britain enjoyed through the global significance of the English language (one contributor cited a billboard seen in China which read: ‘Success in English, success in life’).

However, the Forum heard that neither Government nor Opposition had effectively addressed the anger from a public that had seen money being put into the banks ‘but they cannot get their new community centres or have the police turn up on time.’ And on another sensitive issue, the Forum heard a defence of remuneration in the City where it was based on long-term reward linked to long-term performance, for example in deferred equity that could not be realised for three years.

Some radical suggestions were floated for protecting sectors of the economy from being starved of borrowing in the event of a future banking crisis. It was argued that in India, and to a lesser extent in China, (largely) government-owned financial institutions had co-existed with expanding market freedom and GDP. Alternatively, businesses and families might make greater use of credit unions and co-operatives which, by not being so centralised, would avoid systemic problems.

There was also speculation that British membership of the European Monetary Union would come back on the agenda in the next 10-15 years.

Full list of participants

Nick Baird, Director General Europe and Globalisation, Foreign and Commonwealth Office
Professor Tim Besley, FBA, London School of Economics – Chairman
Professor Vernon Bogdanor, FBA, University of Oxford
Professor Richard Brealey, FBA, London Business School
Professor David Clary, Chief Scientific Adviser, Foreign and Commonwealth Office
Professor Andrew Gamble, FBA, University of Cambridge
Professor Peter Hennessy, FBA, Queen Mary, University of London
Stephen King, Chief Economist, HSBC
Professor Michael Lipton, FBA, University of Sussex
Rt Hon John McFall, MP, Chairman, Commons Treasury Committee
Sir Nicholas Macpherson, Permanent Secretary, HM Treasury
Mr Bill Martin, University of Cambridge
Jim O’Neill, Chief Economist, Goldman Sachs
Professor Richard Portes, FBA, London Business School
Vicky Pryce, Director General, Economic and Policy Analysis, Department for Business, Innovation and Skills; Joint Head, Government Economic Service
Sir Adam Roberts, University of Oxford; President of the British Academy
David Smith, Sunday Times
Sir Douglas Wass [former Permanent Secretary, HM Treasury]
Dr Paul Woolley, London School of Economics