The Government should now re-engage with wealth creators
After another political night of high drama, the UK’S business community woke up yesterday morning to the prospect of further uncertainty. Whatever the outcome of the political discussions over the coming days, the newly formed Government will need quickly to turn its attention to Brexit negotiations.
But now, more than ever, business will need to play a greater role during these negotiations. For this to happen the Government should re-engage with the business community to help strike the best deal for Britain.
It is only by significantly increasing this engagement that it will be able to truly understand the impact on business of each thrust and counter thrust of the live Brexit negotiations. This would provide on-the-ground intelligence and help explain the consequences of various Brexit scenarios direct to government. Lastly, it is important that UK companies have a strong and consistent voice, which is heard around the world, on what makes the UK an attractive place to do business.
There are concerns from some quarters that the UK economy may slow or even stagnate in this interim period. I think we all believe that if Britain wants to continue to grow and thrive in this environment, it needs to focus on becoming an even greater trading nation. When it comes to exporting the UK lags behind many other countries and is actually on a downward trajectory. For example, in 1950 the UK accounted for 10pc of world exports; this figure was less than 3pc in 2016.
UK business needs a strategy for effective engagement at an international level and this needs to be supported and bolstered by the Government. Brexit means that the UK will soon run its own trade policy, which brings both challenges and opportunities. Invariably business will have to engage more with international institutions, including the World Trade Organisation and the B20 – which represents the entire G20 business community – to compensate for the possible loss of influence over EU rules and regulations.
All organisations benefit from an understanding of, and some level of engagement with, global bodies. However, organisations in sectors that depend on global standards, rules and guidelines have the most to gain. Just look at the automotive sector where the next generation of cars and accompanying rules are being developed. Failure to engage can mean being left behind. You only have to look at German carmakers, which have long successfully managed to shape the global agenda around rules and standards, to see how active engagement can benefit businesses.
It is clear that free trade and open economies have brought great benefits to a rapidly increasing middle class across the world. In China alone, it is estimated that 700m have been lifted out of poverty. However, globalisation has not benefitted everyone equally. Particularly in some sectors and areas in the West, globalisation has meant sometimes fewer and relatively less well paid jobs.
While Britain’s GDP now stands nearly 10pc higher than pre-crisis levels, real wages are 8pc down. Some groups in Britain feel left behind. Business is not immune from this. Within the last year alone trust in business has fallen 13pc to just 33pc overall. It is vitally important that UK businesses thrive and prosper during this period of uncertainty and beyond, but we must not lose sight of the fact that government and business must be working together for the benefit of society as a whole.
Last month I visited Germany where I spoke to many businesses from the Mittelstand. I was struck by the
‘You only have to look at German carmakers to see how active engagement can benefit businesses’
intense pride that business people had in running private enterprises that employed local people, delivering real social benefits for the area while simultaneously being global players in their niche.
So how can we energise more of our Mittelstand firms back here in the UK? Ensuring the benefits of global business are tangibly felt locally, is a growing priority for the UK Government. It is important to remember that the UK is already home to some leading world-class private businesses.
There needs to be better ongoing understanding between business and government to help bridge the gap. Is there an opportunity for the Treasury, the Department of Business, Energy and Industrial Strategy, the Department for Exiting the EU and the Department of International Trade to work more collaboratively with business through a single body? Many would say so.
It is easy to get lost in the intricacies of international trade and to worry about putting the right processes in place or engagement at the right level. But we must remember that what sets Britain apart as a trading partner is that it is an open-minded, emotionally intelligent and empathetic nation. Business and trade are fundamentally based on behaviours, values and trust. And this is why I believe that, just as we have long excelled in building railways, roads and tunnels across the world, the UK will be equally adept at building bridges post-brexit. That is why it is important that business and government use this opportunity to re-engage post-election.