John Mills, a millionaire businessman, economist and one of Labour's biggest donors, has urged the party to adopt a radical macroeconomic policy in order to transform the UK's economic fortunes.
Earlier this year, Mills launched his 'Pound Campaign' – a movement to encourage the government to devalue the sterling, with the aim of improving the UK's balance of payments, increasing its exports and ultimately, significantly boosting growth.
At a meeting in London today (6 October), Mills defended his policy recommendations in front of a group of experts, each of whom was given the chance to critique his policy.
Speaking to IBTimes UK after the meeting, Mills said that his plan, if adopted after the 2015 General Election, would lead to sustainable growth of up to 5% per year, unemployment falling to around 3%, government debt becoming more manageable and a shift in the national economy, decentralising prosperity from London.
"I think morale in the country would go up. The political parties in the centre would be in a more stable position and if it was the Labour Party adopting it, I think they'd be re-elected again in five years' time. I don't think it's that difficult," he said.
However, Mills – who donated £1.65m (€2.1m, $2.6m) in shares of his business JML to the Labour Party last year – said he does not think it "would come naturally" to mainstream politicians to launch such an overhaul of the current economic model, which is dictated by a desire to cut public expenditure and slash the deficit.
In a pamphlet entitled There is an Alternative, Mills has described the economics de jour as depressingly familiar and as apparently intransigent as ever".
He suggested that Labour should steer clear of stating clear economic policy before the election, but if successful, should seek to introduce significant change, saying that any significant announcements pre-election are likely to backfire with the electorate.
At the crux of Mills' argument is a desire to move away from the services-dominated economy, reviving exports and substituting imports for domestically-built products. All of these could be achieved, he says, through cutting the value of the pound by up to 40%. Manufacturing should be running at 15% of GDP, but it is languishing at 8.2%
A weak sterling would, he said, allow "much greater profitability" to be generated in manufacturing, exporting and import substitution.
The UK has for hundreds of years operated a discernable fiscal policy, with monetary policy being an important element of economic governance since Keynes. However, the UK has never had a coherent exchange rate policy, said Mills, and it should adopt one quickly in order to improve its performance on the global stage.
He compared the situation to China, which devalued the renminbi by some 40% in the 1990s and went on to become the world's dominant exporter. He also cited the example of Singapore, which has operated similar exchange rate policy, managing to maintain higher standards of living than in the UK in the process.
Responding to critique of his work this morning, Mills said that devaluing the sterling needn't mean higher inflation, recalling that when the UK left the Exchange Rate Mechanism in 1992, inflation actually went down.
He also dismissed claims that an adoption of radical economic policy would spook markets and dampen investment from manufacturing companies, saying that exchange rate is of minimal concern to the sector.
Economists at the meeting – which was held under Chatham House Rules – were relatively positive about Mills' economic plan, but encouraged him to rename it the "Growth Campaign" and take the attention away from the pound, which should form only part of the argument.
It was compared to Abenomics, the policies of Japan's Prime Minister Shinzo Abe, which is based upon "three arrows" of fiscal stimulus, monetary easing and structural reforms".
In Mills' case, the fiscal stimulus would come through infrastructure spend and investment in light industry. The UK's investment as a percentage of GDP was 14% in 2013, well below the global average of 23.8% and China's figure of 46.1%. As well as infrastructure spend, investment must come in people, with training and skills-based learning key to Mills' expansionary policies.
Mills founded the retail company JML in 1986. The company offers a range of household goods and appliances via its media channels and online presence.