Our over-reliance on imports is harming the recovery

It is new markets, not existing ones, that are key to securing long-term economic growth for the UK

For all the disagreement about how to fix the UK economy, there are a few truths about the roots of the present slump that most people accept. In the good years leading up to the crisis, Britain lived beyond its collective means, and built an economy that couldn’t last. Part of this excess was fuelled by cheap, irresponsible credit; part of it was built on the UK’s huge and long-standing trade gap. Since 1997, the UK has consistently imported far more than it exported, creating a serious imbalance that paved the way for the financial crash.

Our research, published today, provides new insights into how the UK economy became so unbalanced. Over the last 15 years, the UK has performed extremely poorly by not providing the products which consumers increasingly want to buy. Consumers appetites for certain products has proved insatiable; in 2009 we bought over eight times more consumer electronics and twice as much clothing as we did in 1997. The problem is that most of this growth was met through an increase in imports, and not domestic production.

Many observers see patterns such as these and assume they are driven by well-established economic arguments about international competitiveness, with the high cost of production in the UK preventing more manufacturing taking place here. Whilst this is undoubtedly true of some low cost products - clothing springs to mind - this line of reasoning often falls down, even for low-tech industries. Recent research showed that the UK now imports more than half of its bacon from the Netherlands and Denmark, where wages in meat processing are twice the level here. Even more concerning is our performance in high-tech sectors such as consumer electronics, where the high value of the goods produced tends to override cost concerns. The UK is an anomaly amongst other advanced economies in being extremely weak in these markets.

What is most worrying, however, is the sheer scale of this shift, and the fact that increases in our imports of consumer products have not been compensated by a large enough rise in exports. Take clothing, consumer electronics and vehicles. Together our poor trade performance in these product markets accounts for more than 40 per cent of our goods deficit. This suggests our difficulty in providing consumers with enough of the things they want to buy, even in just a few key markets, can and is acting as a large drag on the UK economy. We have some outstanding consumer facing businesses in the UK, such as Unilever and Dyson. The problem is we don’t have enough of them to reverse the persistent UK trade problem.

So what should the government be doing to put this right? Part of the response should be to try and increase exports of those things that we are good at, including business services like consultancy and architecture. But that will only take us so far - we also need a greater emphasis on trying to foster the emerging consumer markets of the future, and on making the UK a world leader in these areas. This isn’t just about inventing more technologies – it is about how we use them. The UK’s world-class science base is excellent at generating new ideas, but businesses need far more support to overcome the barriers they face in turning these technologies into high-growth markets.

Take 3D printing as an example. The ability to print personalised goods on demand has real potential for the UK economy in the future, but there are many state-controlled levers that need to be co-ordinated to make it actually work in real life. Without the right regulations to foster consumer and business confidence, without standards to make software and materials compatible with each other, without the necessary physical and electronic infrastructure, 3D printing will remain a niche market in the UK, and will probably take off in another country first. We need to get these things right, and quickly, if the UK wants to be a world-leader in 3D printing – and these principles will apply to many other emerging technologies over the next decade.

Policymakers already lay out and co-ordinate their long-term strategy for many established sectors. Just yesterday the Department for Business, Innovation and Skills published their strategic vision for UK aerospace, for instance. But we want to see this approach applied to those new and innovative markets that have the greatest potential for exports and domestic demand. We would argue that it is the new markets, not the existing ones, that are key to securing long-term economic growth for the UK.

A port in Hamburg. Britain must cut back on its import addiction, according to a new report from the Work Foundation. Photograph: Getty Images

Spencer Thompson is economic analyst at IPPR

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It’s obvious why Thais can’t resist our English footballers. But they want our schools, too

The only explanation is . . . our footer must be great and exciting to watch.

At Bangkok airport, sitting in the Club lounge, as I am a toff, I spotted a copy of Thailand Tatler, a publication I did not know existed. Flicking through, I came across a whole page advert announcing that RUGBY SCHOOL IS COMING TO THAILAND.

In September, Rugby will open a prep and pre-prep department, and then, in 2018, full boarding for ages up to 17. How exciting – yet another English public school sets up a satellite in Thailand.

But I was confused. Just as I was confused all week by the Thai passion for our football.

How has it happened that English public schools and English football have become so popular in Thailand? There is no colonial or historical connection between the UK and Thailand. English is not the Thais’ first language, unlike in other parts of the world such as India and Hong Kong. Usually that explains the continuation of British traditions, culture and games long after independence.

When I go to foreign parts, I always take a large wodge of Beatles and football postcards. I find deprived persons all over the world are jolly grateful for these modern versions of shiny beads – and it saves tipping the hotel staff. No young Thai locals were interested in my Beatles bits, but boy, my footer rubbish had them frothing.

I took a stash of seven-year-old postcards of Andy Carroll in his Newcastle strip, part of a set given away free in Barclays banks when they sponsored the Premier League. I assumed no one in Thailand would know who the hell Andy Carroll was, but blow me, every hotel waiter and taxi driver recognised him, knew about his various clubs and endless injuries. And they all seemed to watch every Premiership game live.

I have long been cynical about the boasts that our Prem League is the most watched, the most popular in the world, with 200 countries taking our TV coverage every week. I was once in Turkey and went into the hotel lounge to watch the live footer. It was chocka with Turks watching a local game, shouting and screaming. When it finished, the lounge emptied: yet the next game was our FA Cup live. So I watched it on my own. Ever since, I’ve suspected that while Sky might sell rights everywhere, it doesn’t mean many other folk are watching.

But in Thailand I could see their passion, though most of them have no experience of England. So the only explanation is . . . our footer must be great and exciting to watch. Hurrah for us.

Explaining the passion for English public schools is a bit harder. At present in Thailand, there are about 14 boarding schools based on the English public-school system.

Rugby is only the latest arrival. Harrow has had a sister school there since 1998. So do Shrewsbury, Bromsgrove and Dulwich College (recently renamed British International School, Phuket).

But then I met Anthony Lark, the general manager of the beautiful resort where I was staying in the north of the island. He’s Australian, been out there for thirty years, married to a Thai. All three of his sons went to the Phuket school when it was still Dulwich International College.

His explanations for the popularity of all these British-style schools included the fact that Thailand is the gateway to Asia, easy to get to from India and China; that it’s relatively safe; economically prosperous, with lots of rich people; and, of course, it’s stunningly beautiful, with lovely weather.

There are 200,000 British expats in Thailand but they are in the minority in most of these British-style public schools – only about 20 per cent of the intake. Most pupils are the children of Thais, or from the surrounding nations.

Many of the teachers, though, are from English-speaking nations. Anthony estimated there must be about five thousand of them, so the schools must provide a lot of work. And presumably a lot of income. And, of course, pride.

Well, I found my little chest swelling at the thought that two of our oldest national institutions should be so awfully popular, so awfully far away from home . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 27 April 2017 issue of the New Statesman, Cool Britannia 20 Years On

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