Friday, 7 January 2011

PwC 2050 forecast: Bad news for the UK

As yet another counterpoint to the rosy predictions of HSBC, financial services giant PwC has issued its own economic forecasts for the middle of this century. Put simply, things don't look good for the UK or the rest of the Atlantic countries - and the reason for this is a failure to exploit the potential of developing world as an export market:

"The latest forecasts from the International Monetary Fund suggest that China will grow by 10.5% this year, India by 9.7%, Brazil by 7.5% and Russia by 4.0% – yet the four economies combined account for 7% of UK exports, the same as for crisis-ridden Ireland.

Moreover, the PwC report predicts that the shift in economic power from west to east will accelerate, with growth rates in the UK and other developed economies lagging far behind those of the leading developing nations. It says the UK will grow by 2.3% a year between now and 2050, compared with 5.9% a year in China and 8.1% a year in India.

"Rapid growth in consumer markets in the major emerging economies, associated with a fast-growing middle class, will provide great new opportunities for western companies that can establish themselves in these markets," Hawksworth says. "If the UK is not to be playing in the slow lane of history for the next 40 years, then it needs to find a way to break into these fast-growing emerging markets on a much larger scale than achieved so far."


Every time I visit the UK I see this in the patenting world in spades - the idea that having an office in Hong Kong somehow automatically gives access to the Mainland Chinese market is all too prevalent, and companies are too willing to lay back on trade from clients in the US and Japan leaving the field to their mainly German competitors. Given that the legal services industry in one in which the UK has, along with financial services, traditionally excelled, this is particularly depressing.

What can UK firms do to overcome this? First and foremost, more skilled workers from outside the EU should be allowed to work for UK firms - the current government's policy of reducing skilled immigration is totally counter-productive in this regard. Put simply, what UK firms have to offer that clients in the developing world need most is know-how, and the best way of marketing this is for people to go to the UK, work there, and see this for themselves.

Beyond this, a greater familiarity with the emerging markets amongst UK professionals would help a great deal - even well-educated UK professionals still have rather out-dated views of these markets and what may be accomplished in them.

2 comments:

justrecently said...

First and foremost, more skilled workers from outside the EU should be allowed to work for UK firms - the current government's policy of reducing skilled immigration is totally counter-productive in this regard.
This line is probably the key one in your post - and it is true not only for Britain, but for most European countries.
Immigration requires good policies, and that is the real challenge. But the right kind of migration may encourage the spirit of enterprise that you say Britain is lacking.

FOARP said...

@JR - Even worse is the fact that, even for the goal of reducing immigration (ostensibly because unskilled immigration causes a drain on public resources) limiting skilled migration does nothing to address this. It simply seems to show that those who say that they wish to reduce immigration because of the supposed cost to the tax payer, are in fact simply doing so out of xenophobia, as skilled migration can only increase tax revenue.