Last month I stood in the middle of one of the largest building sites in the world.
I was in Lagos, Nigeria, leading a trade mission for UK Trade and Investment and the London Chamber of Commerce and Industry. Beneath me was one of five million square metres of land reclaimed from the sea, off the coast of Victoria Island.
When the so-called “Great Wall of Lagos” is complete it will protect an area similar in size to the business district of Manhattan. The vision is that this area — Eko Atlantic — will resemble Manhattan in other ways, becoming the financial epicentre of the region.
Over the past ten years the Nigerian economy has been growing fast. The International Monetary Fund predicts growth to be 7 per cent this year alone. And by the end of this decade Nigeria is set to be the 20th largest economy in the world. There are seismic changes happening across the global economy.
We have already seen the phenomenal growth of the BRIC economies. Now come the “Next Eleven”, of which Nigeria is a prominent example. The changes present great challenges for the UK economy, but also huge opportunities.
With sluggish growth of just 1.1 per cent since the Government’s 2010 spending review, we wonder where demand will come from. As small businesses struggle to get access to finance, large companies sit on piles of cash, lacking the confidence to invest. The global middle class is set to triple to five billion people over the next 20 years. The question is: how does the UK ensure it gets a look in?
First, global success begins at home. Britain won’t win a race to the bottom by pitting economy against society. To succeed we must reform our economy so that it rewards long-term value creation over short-term speculation. We must broaden the base of our economy by sector and by region. Central government must be unafraid to devolve power to cities, regions and localities.
Success in the global economy won’t come from being quite good at lots of things — there is a premium on being the best. So government at all levels must work with business to support areas of existing strength and to develop others. An ambitious industrial strategy is not just important for export industries, but for improving productivity and job quality. It gives business the confidence to invest and workers the confidence to train. We must invest in our success with a new approach to workplace skills that puts employers in the driving seat, and by releasing the entrepreneurial spirits of all with the desire to set up in business.
We must invest in our success with a proper “British investment bank” to ensure that small businesses can get access to the finance they need, and a new network of banks with a geographical mandate to spark local growth. This way, we compete by winning a race to the top. Second, allow success to attract success. Britain has gained immeasurably from its openness, attracting investment from global businesses. We must continue on this path, based on the positive advantages of locating in Britain. Where government working with business demonstrates real commitment to technologies or industries, inward investment becomes less risky and more attractive. Look at what has happened to our car industry since the formation of the Automotive Council. Look at the signal it sends when our universities are constrained from attracting the best in the world because overseas students are put off by our immigration policy. It damages one of our most successful export industries and weakens our economy.
Finally, succeeding together is easier than succeeding alone. We must reject the false choice between export success in emerging economies and export success in Europe. It is not an “either/or” choice. It must be “both/and”. The Prime Minister has worked hard to advance a trade deal between Europe and America. It is an irony for him — and a tragedy for the rest of us — that senior members of his own government talk up the prospect of us leaving the EU, which would mean British businesses would not be able to take advantage.
The focus and ambition of countries such as Nigeria is changing the global economy. A complacent Britain has much to lose. But a Britain that combines our historic virtue of openness with a real commitment to the strategic development of our strengths has everything to gain.