Although the UK has left the EU, the direction of travel for post-Brexit Britain is still not completely clear. Part of the reason for this is that there were two competing (some might say mutually exclusive) elements within the Leave movement.
One group simply wanted to leave the EU because it was ‘too foreign’ and, for them, retaking control of our laws, money and borders was an end in itself. The act of leaving was the completion of their agenda.
For others, including myself, although the constitutional reasons for leaving were paramount, there was also a feeling that the EU was too restrictive for the UK in a globalised era. For them, exiting the EU was the starting point of the process, not the end. It is essential that this outward-looking, ambitious agenda becomes the dominant political standpoint if the UK is to fulfil its global potential.
The Government’s Integrated Review set out how it saw the global security and foreign policy opportunities and challenges but many of us felt that too little attention was paid to the economic agenda, including trade and investment, and how a post-EU Britain could increase national prosperity by utilising and supercharging our natural advantages.
Levelling up is a central plank of the current government’s policy agenda, an acknowledgement that in recent decades, the growth in the UK’s prosperity has not been shared by everyone or all the UK regions. The terms ‘overlooked’ and ‘left behind’ have entered the British political lexicon. There was generally far stronger support for Brexit amongst voters in left behind places, epitomised by Sunderland, where levelling up has become an imperative.
There is also broad agreement that one of the central issues that needs addressing in the levelling up story is the differences in productivity between the regions, which in turn is linked to employment levels and ‘good jobs’ i.e. those that are skilled and further up the value chain, paying better salaries.
Supply-side issues persist, with a higher proportion of those living in left behind places unskilled or without a qualification. But a ‘brain drain’ of those gaining skills, particularly younger people, and gravitating to the south-east and London where higher wages are available illustrates there are demand-side challenges. Tackling the most deep-seated deprivation is also implicit in levelling up.
Rising to these challenges is not only necessary if we are to reap the benefits of a truly Global Britain, but will be financially rewarding too. That’s the finding of today’s new report, ‘Global Britain and Why It Matters’, by the Global Britain Commission, a group of leading businesses working together to model the benefits of embracing a new global outlook for our economy. Leading figures from businesses including Forth Ports, Coutts, UK Finance, Heathrow, EY, Mace, Rolls Royce and Virgin Atlantic are behind the findings. The report’s commissioners alone represent businesses which employ over 130,000 workers in the UK, have annual revenues totaling over £19bn and total assets of almost £90bn.
The report sets out how the right conditions for trade and investment in Britain could lead to a number of benefits including: raising per capita exports of goods and services to the level of Germany, meaning additional £474bn of UK exports annually; the creation of up to 5.5 million export-supporting jobs, which are 7% higher paying than the UK average, and 1.2 million R&D-related jobs; and an additional £19bn of VC investment annually if UK’s per capita investment level can be raised to that of the United States.
What is abundantly clear is that the right focus on a truly Global Britain can reap huge economic benefits for everyone in the UK. Post-Brexit, there is a new trading reality, and British and global businesses can grasp these new opportunities to the benefit of the economy, business and workers.
The UK remains one of the world’s top destinations for inward investment for well defined reasons; a well understood and respected legal system; a skilled workforce with relatively (at least in a European context) liberal labour laws; some of the world’s top universities, open to business collaboration; a stable regulatory environment; moderate taxation policy; a vibrant tech sector; good IP protection and a creative and innovative environment for business start-ups.
All these elements form a sound basis for future prosperity if we take full advantage of these factors and develop our competitive advantages further. As a huge services producer and exporter we offer many of the products that developing countries will require to develop their economic and social capacities.
But if we are to compete successfully in the future, we need to ensure that our research and innovation is translated into commercial products and services which attract the investment needed to scale-up. On this, we are hugely outcompeted by the likes of the US, as well as Canada and Switzerland. Compared to the UK, the US Venture Capital model is far more active, taking equity stakes in the companies and a longer-term view to growth which the UK could learn from and the Commission will be looking at in more depth.
A truly Global Britain also provides a significant opportunity for the UK to influence global trade policy as a means of encouraging green action across the world. The UK government has already been at work, reducing tariffs on environmental goods and collaborating with multilateral institutions to reform the rules around subsidy programmes for potentially damaging industries. While these movements point in the right direction, there are still many tools left on the table for the UK to take advantage of in this area. In the wake of Brexit, the UK now has a much greater ability to make use of bilateral trading tools such as FTAs, in order to both maintain a high standard of sustainable practices within its own trading basket, as well as promoting green practices further afield.
Ultimately, Global Britain underpins our prosperity as a nation, prosperity that has to be earned by making the most of what we have, building on those competencies and trading them with the rest of the world. This requires us to identify our core strengths and competitive advantages as a country, ruthlessly prioritise them and build them into the exports of the future.
This report does not set out to criticise government policy but to lift horizons and recognise just how great the prize for Global Britain might be if ambitious free market policies are followed at home and abroad. It seeks to give a full voice to industry and commerce. It is, after all, business not government who will provide the jobs, exports and tax receipts on which the success of our country and the quality of life of our people will depend.
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