Economy could take 20 years to fix - Heywood

BRITAIN’S most senior mandarin has given a bleak assessment of the future of the British economy warning of a “20-year generational battle” to restore it to full health.

Sir Jeremy Heywood: has warned that it could take 20 years to restore Britain's economy. Picture: PA

Cabinet Secretary Sir Jeremy Heywood suggested the austerity brought in by the coalition government would have to go further, saying there was still an “enormous amount of work to be done” to tackle the deficit.

Sir Jeremy’s comments were reported to have been made in a speech to officials at a civil service event in west London.

“This is not a two-year project or a five-year project. This is a ten-year project, a 20-year generational battle to beef up the economy in ways that we have not seen for many, many decades,” Sir Jeremy told the audience.

The senior civil servant said last week’s economic figures –indicating that UK plc was still 4 per cent smaller than in 2008 – showed there was a “very, very long way to go”.

“Five years on from the bottom of the recession, we have still not even near recovered all the output we lost in that terribly deep recession that we suffered in 2007-08,” he added.

“Those are really daunting numbers that just show the size of the challenge; there is no alternative.”

Sir Jeremy said that rebalancing the economy away from financial services towards manufacturing was “much easier said than done”.

“All the civil servants in the room will be well aware that the last three or four years have been tough,” he said. “There have been years of austerity, years of pay freezes, of pay restraint. Every part of government has been told by ministers – and rightly so – to hunt out waste and tackle inefficiencies.

“But despite all these efforts we have made over the last three years … our debt/GDP ratio is still rising, debt interest payments are rising. There is still an enormous amount of work to get that deficit down to a balanced level, to get the debt/GDP level falling rather than rising.”

Sir Jeremy praised the “remarkably smooth” spending round for 2015-16, unveiled by Chancellor George Osborne last week.

And despite his downbeat assessment, he said it was a “good time” for the new Bank of England Governor Mark Carney to join, describing the Canadian as “the world’s most impressive central banker”.

However, SNP Treasury spokesman Stewart Hosie said that the bleak prediction on the economy had more to do with too much austerity than needing more. “I hope that Sir Jeremy Heywood is wrong but we have been warning of a decade of stagnation because of the government’s austerity measures.”

He added: “Clearly with a ‘Yes’ vote in next year’s referendum a government of an independent Scotland can finally start making the right choices to start growth in the economy again.”