By Alistair Kellie
At a critical moment for the UK’s relationship with the EU, as business and political leaders across Europe digest the UK’s formal proposals on Brexit, there’s an interesting report out today from Eight Advisory1.
The 2019 Competitiveness Report2 examines the performance of the UK’s economy in comparison to the other 24 largest economies by GDP, considering a wide range of economic and social factors including innovation, productivity, environmental performance, education, wellbeing and happiness.
It finds that Brexit is a distraction from the real issues facing the UK economy and urges UK policymakers to look beyond Brexit to tackle key issues holding back the UK’s long-term competitiveness. The UK performs poorly in several areas that are fundamental to the country’s long-term competitiveness. Its productivity has been an ongoing and long-running concern, and there is more to be done to tackle policy issues including economic mobility, primary education and the environment. The UK ranks 23rd in the world for the quality of its primary education and 59th for its primary school pupil to teacher ratio.
The report also shows how the UK continues to rank highly in areas such as higher education and a favourable business environment. It finds that while Germany may be Europe’s leading economic power it does not have a single company in the index of the world’s hundred most innovative companies. By comparison the UK has five.
Eight Advisory also warns that that the long-term effects of Brexit on the UK’s competitiveness are yet to emerge, as international investors have taken the decision to “wait and see” how the UK’s departure from the EU develops. However, says that it is crucial that the UK remains as open and business-friendly as possible in order to safeguard its long-term economic performance and the wellbeing and happiness of its citizens. Failure to do so could compromise the country’s reputation as an international leader in terms of human and economic development.
Author of the report Alexis Karklins-Marchay, Partner at Eight Advisory says that “While Brexit creates considerable uncertainty, the foundations of the UK’s economy are ultimately strong, and it remains an attractive place to invest and do business. However, there are fundamental issues that need to be addressed if the UK’s hard-earned reputation as an international leader is to be protected in the long term.“
“Policymakers must build on the UK’s existing strengths by taking action to reduce income inequality, improve workforce productivity and reduce regional disparities, as the most competitive countries all perform well in these metrics. Taking the right steps at this important moment will enable the UK to continue to be recognised as an example for the rest of the world to follow and will reduce the risk of being overtaken by countries rising up the ranks in terms of overall competitiveness.”
A reminder that the UK, and the City in particular should take these findings seriously is that Europe is regarded as offering substantial opportunities for global investors, despite increasing global economic risks.
So, at a time when we are all concerned about geo-political instability and the impact of Brexit on ‘Brand UK’, perhaps we should remember that competitiveness should not be viewed as a dirty or vulgar word. Indeed, a sense of frustration and insecurity created by trade tensions and political uncertainty has obscured the truth that regulated markets create prosperity. At this crucial moment, policymakers must seek to cut through the political noise.
Alistair Kellie is Managing Partner, Corporate Reputation, Newgate Communications
- Eight Advisory is an independent consultancy specialising in transaction, restructuring and transformation and is one of the largest independent professional services firms in Europe. Its clients include multinationals, private equity funds, banks and individual investors. Eight Advisory is a client of Newgate Communications.
- The 2019 Competitiveness Report has been compiled by the Eight Competitiveness Lab, a think tank established by an advisory group of independent and international business advisors. It has been written for global Investors to demonstrate how countries can best attract foreign direct investment. It evaluates 38 indices to rank the social progress and economic development of the world’s 25 largest economies and shows that the more a country is open to the opportunities of trade, the better its quality of life inevitably becomes.