Yesterday we blogged about the ideas for growth that will come out this week - in particular the review of competitiveness by Lord Heseltine, which is likely to be a driver of the coalition's economic strategy over the remainder of this parliament. As we noted, there was a fairly loose remit for the review, but all spending departments have been involved and there has been extensive business engagement through the review period.
While there has been a lot of speculation about what the review might contain, the one thing that does seem certain is that there will be a large number of wide ranging recommendations for reform and policy change - which hasn't also been the case coming out of previous 'big-name reviews.'
The starting point for any new recommendations must be clear agreement on where our competitive weaknesses lie, what economies we are comparing ourselves to and the economic outcomes we are striving for. EEF's Route to Growth challenged the UK's pre-crisis model of growth; essentially our reliance on consumption by households and government, and the imbalances that had created. In contrast what we now need is more growth from exports, investment and innovation, driven by the private sector. This has underpinned our call for a clear and simple vision of economic priorities from government.
Equally, delivering this change needs a clear view of where the UK is falling down. Some of the issues our members raise that are feeding into the decisions on where they place their next investment are:
- The higher cost of energy relative to competitors
- Challenges securing external finance at the right cost and terms and conditions to make new capital investments
- A lack of appropriately skilled candidates for technical and management positions
- A tax system that - in some cases - places capital-intensive companies at a competitive disadvantage
With these issues in mind, it is critical therefore that all the actions recommended by Lord Heseltine lead to a reduction in the hurdles that companies face in successfully investing and innovating across our economy. It is only by following this approach that the UK will deliver on ambitions to raise the number of companies bringing new products and services to market and growing the number of export-focused firms that are see the UK as a location of choice for their expansion plans.