Today’s Autumn Statement, as I argued last week on Conservative Home, needed to be a bold one. Worrying figures from the OECD and OBR this week have further exposed that Britain is walking an economic tightrope, from which any deviation could cost the Government its hard won credibility with the financial markets. Against this backdrop, the Chancellor’s Statement needed to boost confidence, to encourage businesses to invest and reassure families that there is light at the end of the tunnel. Much of the political commentary, which I am sure will run for years to come, will focus on whether these proposals constitute part of Plan A, A+, B or any other letter of the alphabet. But the long term test of the Government’s strategy will be whether or not it boosts our international competitiveness against the likes of the BRIC’s (Brazil, Russia, India & China), on whom ironically we will also depend for our growth. Indeed, it is only by being competitive that Britain can maintain decent public services.
At present, 40 per cent of our exports go to Eurozone countries. But a decade of slow growth in Europe might change this, and it is the consumers and savers in some of those countries we have hitherto seen as developing that will be critical to our prosperity. Jim O’Neill, in his recent book The Growth Map, has noted that personal consumption in China has risen $1.5 trillion in the last decade, the equivalent of creating another UK within China’s borders. Creating the environment for UK companies to export to these countries is imperative. And as I wrote yesterday, attracting cash-rich institutions like the China Investment Corporation to invest, and help build Britain’s infrastructure for the future, is vital. Investor and businesses rely upon confidence, and that is what the Autumn Statement has achieved.
To compete in the long term, Britain needs to be a place where entrepreneurs and the spirit of adventure can flourish. This cannot be done by the Government picking winners and supporting them, but relies on people with new ideas choosing to launch companies in the UK. Creating the right environment for entrepreneurs today will allow Britain to incubate the start-ups that will be the Google and Facebook of tomorrow. That is why I am pleased that the Treasury has looked at the raft of tax incentives that would encourage people to invest in innovative ideas. But tax is not enough and if there is one thing that has come out of the financial crisis, it is that banks do not always help. Supporting non-bank lenders through the Business Finance Partnership and looking at a the idea of a bond market, both of which I called for in the Beyond the Banks report co-authored with NESTA, should transform the finance landscape for these businesses.
None of this fits neatly into the political dividing lines around which most of the commentary will be focused, but in the long term it will decide whether or not we can compete internationally and pay our way.
Sam Gyimah is Conservative MP for East Surrey
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