We must keep eye on the horizon

Mar 17 2009 by Sarah Green, The Journal

WITHOUT doubt we are all focusing on the “now” . How, as businesses and an economy, are we to get through the current recession and be around to participate in the upturn which will surely follow.

But we cannot ignore the need to keep an eye on the horizon even when the storm is upon us as, if there is any received wisdom at the current time, it is that it will not be like the immediate past.

The future of the UK’s wealth creation being reliant on the City and financial services, with the tax proceeds recycled to the less well-off parts of the UK, does not seem a likely scenario.

Already we are hearing talk of an “industrial strategy”, involving “economic planning”, suggesting an appetite for Government intervention that would until recently have seemed anathema. Whisper it gently, some people are saying that the French might have been right all along.

Government has developed an appetite for active economic intervention and at the present time that is to be welcomed. But such appetites can often generate an eating disorder and there will come a time when we need Government to revert to a more hands-off stance.

These are big strategic issues we all need to consider.

We also need to address the impact of trends such as the growing population and its rising average age, climate change and tighter public budgets.

Against these trends businesses will have to consider how they need to change. Where will the new comparative advantages lie for North East’ businesses?

And Government will need to think about the big picture. What does re-balancing the economy mean and is there a special role for manufacturing? What will be the role of knowledge economy sectors.

And if we are tempted to go for a more interventionist, planned approach to our economy how do we build a consensus around the right recipe? This is difficult stuff involving tough decisions, not least because as with all transitions there are likely to be at least as many losers as winners. There would be serious consequences to getting it wrong.

Realistically we are not going to move to a French model, but may decide that we can better vision the future for the region and the UK. And there is a role for all of us, including the CBI and the Government. The degree of collapse that we are seeing in the current model may yet be turned to good effect.

Sarah Green, regional director, CBI North East