Stuart Popham, Chairman of TheCityUK
Figures from Japan published this week bow to the inevitable, that China has now overtaken them to become the world’s second largest economy, only behind the US.
The inexorable rise of China has been witnessed for years, overtaking the UK in 2005 and Germany in 2007, China is set to overtake the US as the leading world economy within the next decade.
Although this rise does not reflect a new trend, we can still learn from Japan’s announcement today. Firstly, I recall the huge numbers of friends and colleagues who rushed to learn Japanese in the 80’s and 90’s. Schools proudly added Japanese to their curriculums to ensure the next generation was match fit in anticipation of the endlessly Rising Sun. Yet, ten or twenty years on, it is Chinese that would surely prove the more useful language given the country’s inimitable rise as an economic powerhouse.
Although this rise does not reflect a new trend, we can still learn from Japan’s announcement today. Firstly, I recall the huge numbers of friends and colleagues who rushed to learn Japanese in the 80’s and 90’s. Schools proudly added Japanese to their curriculums to ensure the next generation was match fit in anticipation of the endlessly Rising Sun. Yet, ten or twenty years on, it is Chinese that would surely prove the more useful language given the country’s inimitable rise as an economic powerhouse.
This underlines the need for the UK to improve how it anticipates the skills required to thrive in the future and maintain its competitiveness on a global stage. Nowhere is this more critical than in the financial services sector. I fear we think skills that guaranteed the UK’s dominance previously, along with the scale and heritage of our past will translate into future success. This is a worrying and dangerous view when in reality, there is no room for complacency in today’s global economy, characterised by the rise of new economic powers.
The UK must also anticipate, proactively plan and react faster to embrace these new realities. The ONS has today published its Monthly Review of External Trade for December 2010. It tells a very clear story – the US is our number one trading partner with 14.9% of trade exports, yet China lies at 9th with 2.4% of exports. The world’s second largest economy is less of a market for UK skills than Germany, The Irish Republic, Spain and Italy.
I have been going to China four times a year for the last few years, attending business and wider trade delegations like that of the Prime Minister last year. The opportunity for UK skills is breathtaking with support for UK businesses from the likes of the China Britain Business Council providing a valuable platform to showcase these. Today’s trade figures highlight how we are missing developing new markets that could drive jobs and growth in the UK.
I suspect both thoughts are connected – we must develop the skills that our trading partners will value in the future, and we must look to use those skills more globally than ever before.
One other thing I see in the ONS numbers today is that the trade for goods and services combined was in deficit in December by £4.8 billion; while trade in services alone was in surplus to £4.4 billion. With the UK’s strength in areas such as financial services and its reputation for innovation, it is all the more vital that we concentrate on building our reputation for these skills abroad, rather than undermining them at home.
One other thing I see in the ONS numbers today is that the trade for goods and services combined was in deficit in December by £4.8 billion; while trade in services alone was in surplus to £4.4 billion. With the UK’s strength in areas such as financial services and its reputation for innovation, it is all the more vital that we concentrate on building our reputation for these skills abroad, rather than undermining them at home.
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