UK productivity is poor compared with other developed nations and most studies show it falling further backwards, rather than improving. Post COVID-19 and post Brexit, we need to quickly develop strong and compelling reasons why others should invest in the UK, or buy our goods and services.
Where are there weaknesses in our economy that we should worry about and where should we look to invest, in order to realise opportunities for growth?
First, right now I feel that we are complacent about employment. In 2019 unemployment was less than 4% and this was the lowest that it had been since the 1970’s. Most of us need to work to earn a living, but also for self-belief, a sense of purpose and for intellectual or physical challenge. Our latest economic outlook suggests unemployment rising to 11% in 2021. That’s approaching 4 million people and is comparable with the worst of times in the past forty years.
Second, we need to take the link between education and employment more seriously. We need more focus on employment skills and vocational training. The apprenticeship levy has not achieved its goals and in fact apprenticeship starts have fallen by a quarter since its introduction. We send twice as many young people to university as we do to apprenticeships.
We should give our younger people the right options and opportunities, to boost our productivity and reduce inequality. We should all embrace a lifetime of learning. Click this link for some useful insight into why Skills Matter.
Third, we should invest where we have the potential to succeed in global markets. Here are some examples of our strengths, where we have opportunities for growth:
- In the UK we excel in tech! We are a global leader in the fabrication of semiconductors and our growing 5G coverage will allow a vast expansion of the Internet of Things in smart homes and businesses. Through software as a service we are providing leading solutions across many traditional industries. Technology is disrupting every sector in the global economy, bringing a rate of change not seen in decades.
- We have a proud history in the branding and marketing of consumer goods. Think of Diageo, Burberry, GSK or Vodafone. This experience will provide a doorway into the developing economies of the world. The growth of consumer markets in these nations will be one of the most significant changes in the global economy in the next 10 years.
- We have made use of all of the above, to become a world leader in manufacturing and marketing of clinical products and life sciences. Indeed, the UK has the strongest clinical trials pipeline in Europe across all pre-clinical and clinical stages. The world’s top 20 pharmaceutical businesses all operate here and we remain a global destination for inward investment, with an enviable pool of scientific talent.
- The creative industries punch well above their weight in the UK relative to other countries. This has recently been highlighted by significant investment into the UK to develop film and TV studios, from Comcast and Netflix amongst others. There is an opportunity to build upon this position and do even more.
- Finally, when societies feel vulnerable, it offers governments a chance to make changes that have previously felt a bit too hard to swallow. Low carbon infrastructure and energy projects should therefore be a target for UK know-how. Investments in onshore and offshore wind, carbon capture and storage, nuclear, low carbon heat and energy efficiency could play to our strengths and increase wealth and jobs to all parts of the UK.
In summary, it is right that we worry about unemployment. It is damaging to productivity and to our wellbeing as a nation. By investing in learning and skills, we unlock the opportunity to succeed in a global economy which is seeing more change, and at greater speed, than it has ever seen before.
About the author: Richard Peberdy leads KPMG’s National Markets Deal Advisory business. An Economics graduate, he has spent the last 25 years helping our clients develop their strategic business models and then fund and execute their corporate development ambitions.