This article was first published on City AM on 5 June 2013.
The unprecedented rise in demand from a new global middle class, set to triple in size to 5bn over the next 20 years, means we can compete through high quality services and goods – relying on highly-skilled workers and providing well-paid jobs. As economic development in the South and the East spurs new demand, competition is intensifying and we must wake up to it.
We were promised an export-led recovery, but our current account trade deficit increased to almost £58bn last year, up from £20bn in 2011, driven in part by a fall in services exports. While George Osborne promised a “march of the makers”, our trade gap in goods has risen. The problem with the Prime Minister’s argument is not the premise, but his failure to will the means to put the UK in a winning position.
A new book, Turning to Face the East, published today by my shadow cabinet colleague Liam Byrne – which I strongly endorse and recommend reading – argues for the change needed so that Britain can thrive in the “Pacific century”. As a nation, we have been too slow out of the blocks in our trade with China and, as Liam warns, “others are pulling ahead of us”. Since 1990, our imports from China have grown four times faster than our exports there.
And it’s not just China where we risk falling behind. Seven of the 10 fastest growing economies today lie in Africa. I’ve recently returned from leading a trade mission to West Africa on behalf of the London Chamber of Commerce and Industry and UKTI. In the region, Ghana is on course to be the world’s eighth fastest-growing economy between 2011 and 2015, while Nigeria (with expected growth of 7 per cent this year) is set to become one of the world’s largest economies by the end of this decade.
In both countries, I saw the opportunities for British firms: the British “brand” – our historical ties, time zone, language and cultural links – gives UK firms real advantages. But these cannot be taken for granted, and I heard the warnings from their people who say we risk being overtaken by other nations in pursuing opportunities there.
This is all the more urgent because of the situation at home. In a speech earlier this week, Ed Balls laid out the scale of the failure of the government’s economic plan, with growth of just 1.1 per cent since 2010, and borrowing set to be £245bn more than planned by 2015. If we are to turn this around, we must retool and re-energise our economy, and rediscover our trading prowess.
To do this we need a government that will stand full-square behind our productive businesses, enthusiastically backing their success with an ambitious, modern industrial strategy, investing in the next wave of innovation. We also need ministers who, instead of willing exit from the EU, recognise that our membership has a key role to play in all this: it is through deals being negotiated through the EU that we will gain better access to markets from Japan to Malaysia, India to Canada, Colombia to the US.
With the UK at a crossroads, now is not the time to be trapped by a little England mentality. We must think big and ensure Britain fulfils its potential.