11th November 2011
It has structural imbalances, such as an over-reliance on finance, parts of its infrastructure are inefficient and – perhaps more importantly – much of its trade is with the beleaguered Eurozone rather than with the growth areas of the global economy.
When quizzed on the economic future of Britain, relatively few politicians have gone beyond platitudes about needing to generate growth. However, there are a number of people emerging suggesting an alternative vision for Britain.
Firstly, there is the pro-business vision advanced by organisations such as the CBI: "Challenging the Government to shape the right economy, it's the growth part he seems most exercised about. The issue, he argues, is Britain's competitiveness, with the economic health of many of its traditional European and North American markets fragile, and global inflation rising."
"The problem is clear, as is the resolution," he says. "The only solution for the difficulties we have is new growth and it's something only business can provide. The Government is not the solution but they're the people that one looks to create the environment in which businesses can deliver the necessary outcome."
Looking outside the eurozone
This argument that the UK should be changing the markets with which it trades has also been advanced by Mindful Money economist, Shaun Richards. He says:
"I suspect that we need to think about Europe a little less in the UK and start doing a little more of our business in South-East Asia. This is where the action is. Otherwise we risk becoming a backwater."
"Cutting to the chase, the point no one is talking about is that a world which features a closer European Union from which the UK chooses to exclude itself, is one with major regulatory and competitive implications for the City. The UK finance sector has enough trouble with legislation when it is consulted and can vote as part of the decision-making process; it is seriously unnerving to think what might happen if it was deprived of even its current opportunity to influence developments."
"This line of thinking is leading in some circles to the serious suggestion that the City should become more offshore – like a properly regulated but less sunny Bermuda, for example – where it would follow the spirit of US and EU regulation enough to maintain customer confidence, but not have to suffer its choking detail."
But the blogosphere has not necessarily been impressed by the business vision, believing it simply looks like more of the same. In response to the CBI's comments sdharbinger on the Telegraph site says:
"It's hardly 'visionary' is it? I don't see anything new, imaginative or inspiring here. This new boss seems to share the ideas of the old boss, which are all broadly in-line with the government and tend to favour corporations and top-level management. But all their policies amount to is a blind faith via the assumption of a predictable 'cyclic nature' of recessions and recoveries, which can only be currently held if one entirely ignores the threat of the critical mass of global political, economic and financial crises and the dark cloud of speculative vultures that are circling global markets waiting for the bubbles of QE to burst."
The more left-leaning vision for Britain's economic future is given by Brendan Barber at the TUC and in more detail by MP Jon Tricket here . However, these are still a predictable blend of fair taxation, slower austerity measures and curbs on business.
An alternative vision
A recent article by Brian Appleyard in Prospect magazine – suggested an alternative vision:
"One way of overcoming that would be to embrace the existence of a poorly paid, mobile workforce and turn ourselves into a haven for inward investment-Britain as an emerging market. This may be wise now that economic power is slipping away from the US; the Indians and the Chinese might need more European manufacturing bases. But it is scarcely an attractive prospect."
However, he is optimistic that by 2021 the UK will have found a way to contain the ‘cult of turbo-capitalism that nearly destroyed us in 2008' and found a way of educating our young into ‘a kind of identity that will prevent them becoming passive consumers.'
He adds: "For Britain, as elsewhere, technology will be crucial. Capitalism was boosted in the 1990s by the fantasy of markets made perfect by computers and, in the 2000s by the further fantasy of a politics made perfect by internet and cellular connectivity. The next state will-or should be-not a machine dream augmented by humans but a human reality augmented by machines."
In the same piece Martin Sorrell, CEO of WPP, the global marketing company, says the government must focus on education, technology, infrastructure, incentives and immigration: "Britain's strengths are primarily in the service sectors, financial included. These must be encouraged. We need increased focus on education, from primary schools to elite universities (nothing wrong with elites). Technological centres should be encouraged. Infrastructure must be improved and taxes lightened. Immigrants must be regarded as a source of strength."
Either way, it is difficult to disagree with this blog on the LSE that there is a dearth of ideas at the heart of politics:
"We do not have two or three clear visions of Britain that are being offered to the electorate. Instead we have a group of politicians whose ideas about how to build a better future are being squashed by the reality of having to save money. The public senses this, and believes are by and large that the cuts would be of the same order of magnitude whoever was in charge. Since the Conservatives, and the Liberal Democrats, did not cause the current mess the public will give them a chance to sort it out. There is no great enthusiasm for either party, but there is a grudging respect."
The UK needs a vision that will pull it forward, rather than spending a lot of money trying to get back to where it was before.
More from Mindful Money:
To receive our free email newsletter sign up here.