The writer is director-general of the CBI
While Britain traditionally does not like to do economic plans, France, Spain and the United States have already launched strategies for the post-pandemic era.
The combination of Covid-19, our departure from the EU and the race to net zero means that this time the UK must have a plan. The government has made the running with the launch of Build Back Better, a strategy for growth announced in March. It gets the big calls right, setting out major ambitions for the decade ahead and a macroeconomic framework for achieving them.
What it does not contain is a prospectus for how businesses across the country can grow. So the CBI is releasing a report that offers a microeconomic complement to the government’s vision — the second leg of what we can now dare to call a national economic strategy.
There are prizes for businesses to win in the next few years, provided we make some hard choices about where Britain can compete. For instance, the UK’s hydrogen power and carbon capture and storage technology has world-leading potential. But we risk falling behind in the production of electric vehicles without more gigafactories.
By harnessing the care that employers have shown their staff during the pandemic, there could be a £180bn uplift in gross value added by 2030, driven by health interventions inside and outside the workplace. On trade, properly equipping small and medium-sized businesses with the knowhow to take advantage of overseas opportunities could be worth tens of billions in added growth. And rebalancing the skills system towards future industrial demand remains urgent if we are to achieve any of these aims.
Success or failure now depends on whether business and government can work in unison rather than in parallel. The CBI’s plan is informed by meetings with 500 business leaders. It also has had direct input from the prime minister, the chancellor of the exchequer and the business secretary, as well as from the opposition, heads of the devolved governments and metro mayors. There is unity of purpose.
Government can help businesses to deliver on common objectives. This requires making investment and innovation part of the core remits of our economic regulators. It also means treating infrastructure investment as necessary but not sufficient to “levelling up”.
A fresh approach to industrial strategy is required — one that aims at building varied and genuinely world-class economic clusters in different regions and nations of the UK. Take the south-west of England or the West Midlands, for example, which possess prowess in advanced manufacturing. Or the north-east of England, which, thanks to offshore wind and other renewables, has the potential to be a global success. And we should not forget fintech in Northern Ireland; Scottish financial services; and Welsh semiconductors.
This will need business leaders to get involved too. They can determine the pace of decarbonisation, create genuine employment opportunities for staff of all backgrounds and capitalise on the digital adoption surge of the past year to transform productivity.
The CBI has to adapt as well. We’ve always been good at advocacy, but now we want to put teams on the ground to support businesses as they change and grow.
The truth is that we have only one shot at this. I worked in the Treasury during the financial crisis. We and the subsequent government were so busy firefighting that despite our best intentions we were not able to transform the economy in the way everyone agreed was needed. Productivity in the UK flatlined over the decade that followed as social divisions deepened.
Future historians will judge whether 2021 was the year that the UK economy was put back on an upward trajectory. We have to seize the moment.