At the moment – the only certainty seems to be uncertainty
As the economic situation has improved, the political risks have escalated, CBI President, Sir Mike Rake warned in a speech to the Lord Mayor’s Trade and Industry Dinner at the Mansion House in London.
He warned politicians of all colours not to boil down complex issues that have real economic consequences – like how the UK is governed, the State’s role, and our place in Europe – to sound-bite solutions.
Sir Mike raised the challenge to businesses to show people they are part of the solution and that growth must benefit everyone.
Sir Mike said:
As the UK economic situation has improved, the political risks have increased.
With just 9 weeks to go, we’re fast approaching the most unpredictable election in a generation.
At the moment – the only certainty seems to be uncertainty.
Whichever party or parties are in government could bring markedly different policy agendas for business.
As we get closer to the election, policies will be presented in ever-more simple terms. But the reality is that the challenges facing our country are complex and are not going to be solved by sound-bite solutions.
And we must remember that many of these issues – and the debates surrounding them – will have real economic consequences.
Sir Mike highlighted three important issues – on devolution, he said:
Devolution is a potential opportunity to drive growth all across the UK.
But we need to carefully analyse the impact of any new powers. Taking our time to weigh up the costs and benefits before any decisions are made.
And it is critical that any new powers preserve the integrity of our internal market which is a magnet for foreign investment across the whole of the UK.
On the State’s role on markets and the tax regime, he said:
Short-term ‘politicking’ might generate a quick headline today, but it does little to encourage innovation and job creation tomorrow.
We need constructive policies which will help get our country back to profitable growth.
Take tax, for example – a competitive tax system can encourage enterprise and innovation. We have seen how reductions in Corporation Tax helped the UK become the number one destination for foreign direct investment in Europe.
On the UK’s place in the world, he said:
The political debate about the UK’s place in the world continues to cause uncertainty for business.
This situation isn’t being helped by some of the current debates around essential migration and the European Union.
Driving growth isn’t about an “either/or” choice – but about being open to all opportunities – at home and abroad.
We need to attract global talent and up-skill our population here in the UK.
We need to embrace the EU’s Single Market – turning each British customer into 7 European ones – and look to new opportunities in emerging markets.
Immigration has been – and will continue to be – part of the solution to our skills shortages whilst net immigration targets will not work.
Membership of a reformed European Union is crucial for the bottom-line and it’s also in the national interest.
TTIP illustrates the potential prize on offer if we engage with globalisation on our own terms.
It could help establish an area of Transatlantic Trade including 800 million people, adding at least 10 billion pounds to the UK economy every year.
On making sure that growth benefits everyone, Sir Mike said:
At home, we’re facing another challenge – after six years of falling wages, we have to ensure that this recovery is felt by everyone.
Growth must be something people see in their daily lives, not just something they read about in newspapers and hear about from economists – and we are beginning to see this happen.
Business needs to show people it is part of the solution. What matters to society also matters to business.
It is in our interests to have happy employees and wealthy consumers.
And by treating customers fairly business can increase public trust and improve its credibility. This is the best way to generate sustainable profits.
The long-term solutions for increasing our poor productivity are encouraging investment and getting our workforce the skills they need to compete in a globalised world.
In the global skills race, the bar is being set higher and higher. By 2022, half of all jobs will require workers to have completed some form of higher education, including apprenticeships.
If we get skills and education right – the prize would be sustainable increases in wealth for everyone.