The recent focus on trade links with China reflects both the urgent priority to develop export opportunities for the United Kingdom economy and the widely recognised prominence of the emerging Asian economies to the rest of the world economy. Statistics abound to prove the validity of this approach but comparing the aggregate 67% growth of the UK economy since 2000 and the staggering 386% growth of China during the same period should be ample if slightly frightening evidence.
Similar proportions are emerging in relation to Indian and Indonesia but, in the case of India, for example, the UK lags behind the Netherlands as a net exporter so another key message is within the European Union where there is a mixed picture in terms of market penetration of these increasingly powerful economies. In short, the UK has plenty of opportunities to increase exports but also a lot to do to become properly competitive.
There are several policy areas where action is called for. Becoming more productive as an economy as a whole is the overarching requirement. Many sectors of the UK economy are exceedingly competitive but some are less so and these tend to be the areas where our EU partners can outflank our export efforts by being keener on price and, sometimes, quality. Nationally, government is delivering on key issues such as infrastructure investment and the perennial problem of disparities between regional growth rates.
Tackling productivity is a long-term task but, as the Treasury’s productivity plan (Fixing the Foundations: Creating a more prosperous nation) notes, raising the annual trend growth by just 0.1% would mean the UK economy would be £35 billion larger in 2030, the equivalent of £1,100 extra for every household. The drive to increase productivity is, therefore, of paramount importance.
An essential part of the productivity plan is the strategy to provide the pool of skills required by a vibrant and developing economy. This is an area where the Education Select Committee in conjunction with the Business, Innovation and Skills Committee will be exploring as part of the major inquiry on productivity, starting in November at a conference where we bring together academics, business and politicians.
The Government is quite correct to make the link between international aid and trade – Brazil is a case in point precisely because, in this case, we have been slow in cultivating relationships in this way and, consequently, trading activity is not particularly strong.
Businesses thinking of developing or enhancing export markets can access advice and help from a variety of sources. There are many misconceptions about international trade but the huge opportunities more than justify efforts to find markets.
Developing links with emerging economies is essential to our nation’s long term prospects, but providing the next generation with the skills and knowledge they need to compete in this global race is the immediate challenge for all “One Nation” Conservatives. If we fail them, do not be surprised if voters hear the siren voices of the populists of both the left and the right.
Neil Carmichael is MP for Stroud and Chair of the Education Select Committee.