Our economy needs a radical overhaul to shake us out of stalled growth and our Brexit malaise - but today's Spring Statement looks unlikely to propose anything that will genuinely tackle low wages and poor productivity. Anna Birley Policy Officer 13th March 2019 Blog Co-operative development Economy Share Tweet Hidden among debates on Brexit today, the Chancellor will be presenting his Spring Statement. He is expected to present an upbeat picture, given January’s record monthly surplus. However, his speech is unlikely to admit that his surplus is based on a combination of failing austerity and growing inequality. The tax returns increases are, according to analysis by the Resolution Foundation, driven by steep pay increases for those in the top 20% income bracket. Meanwhile for middle- and low-earners wages have stagnated, and public spending continues to be depressed by the pursuit of austerity. The Bank of England’s chief economist, Andy Haldane, recently said that “productivity is what pays for pay rises” – so it is hardly surprising that this wage stagnation is expected to be accompanied by the OBR cutting expected growth forecasts. The manufacturing sector is in recession, and investment has dropped by 3.7% over the last year. The co-operative movement knows from centuries of experience that inclusive business models and a democratic economy are the tonic for falling productivity. Companies and organisations in which employees have a real influence, and especially when this comes with a genuine ownership stake, are more productive than organisations where this is not the case. In the States, the ‘National Center for Employee Ownership’ has created an index of employee-owned businesses which investors can use to invest in a basket of employee-owned businesses – this index far outperforms traditionally run and owned companies. And on a macroeconomic level too, the new Economic Democracy Index, measuring economies by the extent of workplace rights and collective ownership like co-operatives and credit unions, has found a clear correlation showing that economies where workers have a greater say and stake in their workplace are more productive. Moreover, worker-owned and co-operative are more likely to survive. In Quebec, the survival rate for new co-operatives after five years was 62%, compared with just 35% for all businesses. Data from the Office for National Statistics reveals that the numbers in the UK are even more stark – twice as many co-operatives survive the difficult first five years as other businesses. In today’s statement, we are looking for the Chancellor to provide practical steps to tackle our poor productivity, not platitudes on our budget surplus. This means a radical shift to an inclusive, democratic economy – with ambitious policies to enable worker buyouts, practical and financial support for the co-operative sector to grow, workers on every board, and profit-sharing schemes to re-establish the link between profits and wages.