Sugar rush

UK Labour Leader Keir Starmer has often been accused of leading an ultra-cautious election campaign that overnight results show paid dividends. But few can say that Britain's incoming prime minister played it safe on his key economic pledge. Starmer has promised to achieve the highest sustained growth rate in the Group of Seven — annual expansion of 2.5% — to get the UK economy firing again after years of malaise. Friday morning's election results show that Britain's voters have given him a huge  majority in Parliament to deliver on a plan that aims to revive the economy while also insulating it from global shocks. Topping the G-7 growth charts will not be an easy feat, given that UK gross domestic product rose by just 0.1% last year. That's the second-worst among the group, and the US economy continues to motor at a much faster pace. The OECD has Britain staying at bottom, or second-lowest, for the next two years too. "There could be a bit of a sugar rush over the next 12 months or so," Howard Davies, a former chairman of NatWest Group Plc and former deputy governor of the Bank of England, told Bloomberg Television. Even so, "unless you can do something fundamental on productivity and investment, I think 2.5% is going to be a very tough thing to get." Keir Starmer Photographer: Betty Laura Zapata/Bloomberg At the heart of the plan by Starmer and his Chancellor-to-be Rachel Reeves is a promise to implement a "securonomics" strategy that borrows heavily from the Biden administration and its "modern supply side economics" philosophy. With money tight, they have concocted policies to boost Britain's woeful growth rates on the cheap. Labour vows to deliver growth and security with a new industrial strategy after Britain was heavily exposed to the recent energy and supply shocks shocks from abroad. Starmer and Reeves also promise a period of policy stability after years of Brexit chaos and infighting within the ruling Conservatives, potentially a tonic for business investment. Key to that are prudent fiscal rules that will reduce the risk of a Liz Truss-style blow-out but will also hinder the new government's pledge to boost public investment. Labour is relying heavily on growth being spurred by ripping up onerous and expensive planning rules that bedevil property developers. Starmer may also get a growth boost from efforts to smooth trade with the EU. But he has stopped short of promising to rejoin the customs union or single market — red lines that will significantly limit the economic benefits. Finally, the party also hope that decentralizing more power from London can aid the economy. While economists are unsure over whether the scale of Labour's plans are enough to significantly lift Britain's growth rates, enough voters have decided they are worth a shot. When a German manufacturing firm is taken over by a foreign investor, its productivity is likely to experience a lasting boost, according to newly published research. Data covering 25 years show that over an eight-year period following the acquisition, output per worker rises by some 5% and wages by roughly 2%. That's achieved by reducing employment while keeping output levels constant and only moderately decreasing total labor costs. Similar conclusions might also apply to other advanced economies operating at the cutting edge. "This mechanism might be most relevant in countries close to the technological frontier, such as Germany, whereas upgrading technology after a takeover presumably plays a larger role in developing countries for any positive effects on productivity," the researchers write.