This is a good article from the Telegraph. Check it out!
The article tries to combine two major news stories, the Fed‘s signal on rising interest rates and George Osborne’s UK Budget. Yesterday, the Fed also signaled that it is not ready to raise interest rates quite yet – so this morning equity markets in the Far East have responded favorably. So the first part of the Telegraph’s story doesn’t quite stack up.
I agree that Osborne has been the most political UK Chancellor since the War – Osborne has never really been strong on Economics. Osborne is a political chancer – I accept that he has been very lucky. The UK has benefited enormously from lower oil prices, prolonged record low-interest rates, and economic incentives to work, rather than stay on benefit. Osborne has shrewdly used the Budget to take the wind out of Labour’s attack. It’s a confident Budget, without any headline giveaways ahead of the general election.
In terms of economic outlook for the next Parliament, interest rates will certainly rise and oil prices could well spike on the back of political factors in the Middle East.
Sadly, Osborne has not done enough to increase the UK competitive position and exports in particular. UK labor productivity is still way behind key competitors. Businesses will continue to look to hard-work immigrants, until the indigenous population takes up the challenge of open competition. There’s a serious skills shortfall, compared to competitors – this starts with education but continues with workforce training – part of the problem is perhaps to do with health, fitness and energy on the back of increasing obesity?
Additionally, the UK relies too much on the Financial Services Industry, where there is not sufficient competition to protect consumers interests – also political lobbying ensures massive bonuses, out of step with the wider economy. Most importantly, the Financial Services Sector is not doing enough for SMEs (small to medium enterprises) – SMEs typically create jobs, not big business that prefers to outsource and offshore. The UK still desperately needs an industry strategy to promote sector’s like high technology to leverage inbound investment from the likes of China. On the back of an industry strategy, there must be serious effort to focus the workforce’s skills accordingly. With the increasing technology, there will be a continued and accelerating loss of unskilled, semi-skilled and skilled jobs – language skills could help with emigration. Most importantly, massive investment is required in language skills and professional selling to increase UK exports. I would also like to see encouragement for professionals to take a sabbatical overseas, say in China or Japan. With Japan’s aging population, Japan will need immigrants.
Depending upon the election results in May, the next Chancellor will likely be faced with more risks and bad fortune, rather than luck. Tough times are ahead. Real strategic decisions are required, which will require imaginative thinking. Even after the professional strategic analysis and decision-making, there will be massive risks on effective delivery. The government still relies upon the major consulting firms, who, time and time again, seem to feather their nests, rather than deliver effectively. There’s a need to promote top class independent professionals and leaders from academia. Here’s an example of a template for an industry strategy.
Perhaps, the UK and China should combine resources, expertise and investment in state-of-the-art, best-of-breed, public healthcare in their countries?