Britain glows with confidence about its future as London summit opens
As Prime Minister Margaret Thatcher sits down with six other heads of government for the economic summit, Britain itself glows with an economic confidence not seen here for years, perhaps decades.Skip to next paragraph
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There is even talk among economists of Britain's catching up in productivity and affluence with West Germany. Alan Budd, for instance, a professor at the London Business School, sees ''quite a good chance'' for productivity in British manufacturing to reach the standards of France or (West) Germany in five, perhaps 10 years.''
A top banking economist comments: ''People are beginning to understand that the world doesn't owe them a standard of living. I see no reason why the British ability to work should be any less than in any other country.''
And Roy Batchelor, a senior research fellow at the City University Business School, says the British have acquired the will to work, to please customers, and to do a good job.
At the same time, he sees some tendency in West Germany for workers to see something more in life than hard work, as shown partially by the current drive for a 35-hour workweek. ''I wouldn't be surprised if the German growth rate goes down,'' he said.
As a result, Mr. Batchelor suspects Britain could be ''more equal in Europe'' by the year 2000.
Creation of the gap between British and German living standards took two or three decades, he points out. The latest comparative statistics show that the Britain still lags in per capita output (goods and services produced). The British figure for 1981 was $8,886, compared to $11,076 per person in West Germany, $10,552 in France, and $12,647 in the United States. Economists assume this is already narrowing.
Public opinion in Britain probably has not yet caught up with the surge of confidence among economists. But here is some of the evidence of change several economists offered:
* Productivity in Britain in manufacturing has been growing at a high rate of 5 to 6 percent a year since 1981. That compares with something like 2 percent per year in the 1960s and 1 percent annually in the 1970s.
Last year some economists argued that this productivity surge was merely a short-term cyclical result of the deep recession of 1980-1981. Companies, they said, shed their least productive facilities during these hard times. But once the recovery proceeded, productivity would fall back again. That hasn't happened.
''This is genuine productivity growth,'' Batchelor says.
Nationalized as well as private companies have done much to improve their efficiency. British Steel Corporation, for example, was the least productive steel company in Europe. Now its officials claim it to be the most efficient. Rolls-Royce Ltd., maker of some 20 percent of the jet engines for the world's large commercial aircraft, figures it is within 1 or 2 percent of the productivity level of its American competitors.
* The trend in growth in national output has stepped up. Gross domestic product is expected to increase somewhat more than 3 percent this year, which is high by British standards.
More important, the Thatcher government's conservative economic policies have ended, at least for the time being, the stop-go business cycle that has plagued the British economy for decades. This current policy involves a steady but gradually reduced growth in the nation's money supply, plus a gradual trimming of the budget deficit.
''Things look as good as I can remember in dealing with the British economy, '' notes a senior banking economist with decades of experience.
* The government's strong support of the free market has greatly reduced regulation that has often hampered growth.
''There has been a big bonfire of controls over the economy,'' a high government economist says. ''That undoubtedly helps.''