It must act decisively if Britain is to regain its competitive edge. British business has all the ingredients for success. The UK is one of the world’s most dynamic, innovative, and forward-looking countries. We are the sixth-largest economy, and the second-largest exporter of services, while our entrepreneurs are at the forefront of AI and advanced manufacturing.
But business is being held back. When the first international competitiveness rankings were published, the UK was 13th out of 33 countries. By 1997, we had climbed to 9th out of 46 nations. This year, we were just 29th out of 67 economies.
This is simply not good enough.
The competitiveness of our economy is famous for efficiency, adaptability, and regulatory stability – all critical ingredients for addressing the UK’s stagnant productivity growth. This is not academic. Governments and businesses consider these metrics when deciding where to invest, which ultimately drives growth.
Increased tax and regulatory volatility has eroded business confidence and contributed to our decline in rankings. This needs to change.
The UK has been upping its game. The Office for Investment has attracted new investment in high-growth industries including life sciences, AI and energy. However, we are still not the sum of all of our parts.
In today’s increasingly dog-eat-dog world, it’s more vital than ever to stay ahead of the pack. That means taking a laser-like focus on sharpening the UK’s competitive edge.
That’s why the British Chambers of Commerce is today recommending a set of actions the Government should take to cut the costs and regulatory burdens holding back business and deterring investment.
With the Budget approaching, we’re absolutely clear that the Chancellor must rule out further increases in taxes that are adding to labour costs and holding back hiring and investment. The Government should also axe the windfall tax on oil and gas to address the crippling energy costs for business, and provide a clear strategy for the North Sea’s transition to a renewable future.
The UK also needs to double down on infrastructure investment to drive growth, including the construction of new runways at Heathrow and Gatwick, as well as the expansion of Luton Airport.
And when it comes to economic diplomacy, we need to use our new industrial and trade Strategies as our manifesto for branding Britain all over the world.
Bolstering the UK’s competitiveness is of course a joint venture between government and business. And business stands ready to help. The BCC’s partnership with the FCDO on a forthcoming joint Diplomatic Advisory Hub, for example, will mean SMEs have access to the latest insight into overseas markets to grow their sales.
Competitiveness also means improving regional cooperation in the UK, with areas like life sciences, research and data centres all fertile ground for a more coordinated approach. Alongside this, we need planning systems which can attract and retain job-creating private investment.
Embracing just some of our recommendations will improve the UK’s economic outlook, but delivering them all will help unleash the imagination and dogged determination of British business to provide the benefits of economic growth that people can feel in their pockets.
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William Bain is Head of Trade Policy at the British Chambers of Commerce.
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