The competitiveness of Britain and how it retains a wealthy economy

(qlmbusinessnews.com via uk.finance.yahoo.com — Fri, 30th Sept, 2016) London, Uk —

Earlier in the week the UK economy received its ranking report from the World Economic Forum (WEF) and over the last year it has risen to being the seventh most competitive economy around the globe.
Well that’s good news for jobs and your wealth – especially as the three countries the UK overtook during the last year were the dynamic Hong Kong, the robot futuristic Japan and the regularly lauded Finnish economy. So why has the UK risen up these competitiveness rankings? What can we learn from the six countries even higher up the rankings? And is it all going to go wrong with Brexit?

First the good news. The ranking has gone up because of even more ‘efficient goods and labour markets’, ‘sophisticated business processes’, a ‘high level of digital readiness’ and apparently a ‘partial recovery in the macroeconomic environment’. I am not sure if that wholly reminds me of the UK economy I know and see…but I guess the WEF are the experts.

The three most competitive countries in the world as per this week’s WEF data are Switzerland, Singapore and the United States much to the glee I am sure of the average Brexiteer as you would struggle to name three more dynamic, flexible and global advanced economy countries in the world. The route is clear: rip up regulation, liberate business and don’t be afraid to be inherently global.

And yet…sitting just behind these three countries are Germany, the Netherlands and Sweden, three inherently capitalist with a social edge countries where redistribution is important, taxes can be high and the untethered market is discouraged. You can imagine disappointed Remain voters from late June pointing to these countries and bemoaning the future direction of the UK economy.

If I have learnt anything about economics over the last twenty years it is that you will get a range of different opinions from a range of different economists…and one set of economic criteria or policies generally do not work everywhere – and often the political and social shifting sands change views and opinions over time.

What matters more than anything is ‘buy in’. The day American citizens do not believe they cannot become rich or become President will be the day the amazing economic performance of the United States comes to an end.

Similarly the vision the average Swiss, Singaporean, Swedish or Dutch citizen has about their country’s general direction and values – which all subtly differ from one another. After such a split Brexit vote, this ‘vision thing’ is the key for UK policy makers – and the key is that it has little to do with being in the European Union or not.

The UK is a very international economy and if you invest in the UK markets you are getting inherently global exposures with well over two-thirds of FTSE-100 earnings from outside of this country. That’s why we have those ‘sophisticated business processes’ and flexible and efficient goods and labour markets. UK corporates have no choice but to be competitive with all types of economies around the world – either compete or commercially die.

So no ‘little Englander’, tariff barriers or even defensive postures. If you want to be competitive and rank well in WEF surveys then you have to embrace the world. The UK’s got some natural advantages here but it is not God-given.

In short if you want to stay wealthy then embrace the world – as an individual, investor, employee or entrepreneur. And if we all do this then the UK’s competitiveness ranking will take care of itself irrespective of the increasingly tedious post Brexit vote debate.

By Chris Bailey