I was asked to give a ‘reply from business’ following presentations by two economists giving briefings on the national and regional economy. The audience was 159 people, primarily from local authorities whose job it is to drive economic growth.
Phil Jones – Speech
I heard it once said that ‘economic forecasting is like trying to drive a car blindfolded whilst following directions given by a person looking out of the back window.”
Conferences like this are very important as it at least gives a big picture view of trends and outlooks, with the usual public health warning that the past may not inform the future. Big insights is what we need; best bets; quality thinking and expert debate.
My job today is to give some commentary from the private sector on today’s forecast. I will declare my interest in being a large business in Tameside; aswell as sitting on the strategic advisory board to the Greater Manchester Growth Company. I will also declare I’m no economist, I defer to your wisdom in this area.
I spend a lot of my time with businesses across the whole of the UK and here in Greater Manchester, taking feedback from source and injecting it in to the service providers whose job it is to deliver the conditions for business growth.
Some of it isn’t always easy to hear; business can be impatient; yet should always be viewed as a ‘critical friend’ by the public sector.
It’s clear that we all share the same ambition for the region. How to grow our economic base through making more, exporting more and backing winners?
From the excellent observations delivered by Professor Gibson and Richard Holt, we can see that the overall UK economy is expected to grow and business confidence looks positive in sectors. All the reports I’ve read from the membership organisations like the British Chambers of Commerce; the IoD and the CBI confirm this.
Globally the UK is in good shape. In two recent reports the UK has ranked number two globally in the Global Innovation Index and Number One in Europe for Entrepreneurialism.
These are great signs and validation of the bias of UK people towards short term orientation and risk taking exactly at a time when the world seems to be moving so quickly and addicted to the fix of radical innovation. With new inventions; new possibilities; new ways of working; new competition and landscapes being the order of the day
Speaking at the recent Telegraph Festival of Business, Nigel Wilson the CEO of Legal and General called for more ‘Slow Money’ through ‘Passive Equity’ in order for us to create the long term economy. I personally like that sentiment too as short termism has driven some contrary behaviour in the last decade. We need to blend.
I’ve always loved the Warren Buffet saying ‘ You can’t make a baby in a month by making 9 women pregnant.’ Our economy will take some time to re-balance; so we must be focused yet patient; passionate and relenting in our effort.
Nevertheless, the need for growth is becoming urgent – politically and financially with an election looming. We’ve some big bills to pay a vibrant economy is about the best medicine the doctor can prescribe.
Talking recently in Westminster I highlighted the growth opportunity of ‘scale-up’ businesses, not start-ups (10-49 category). These businesses, already established, have an average turnover of £2.8M and 20 people employed. They need more time, investment and focus.
Exporting is also key. With a weakened pound; lowering government demand and growth double that of the developed economies in the developing economies, it’s an easy win to dial up our growth riding the demand of others.
But this is not some easy win and it will require work. The 2014 Price Waterhouse Coopers Global CEO survey showed 57% of CEO’s naming the USA, Germany and the UK as their key targets for expansion; up from 42% the year before. We are all going after the same prize! We are not on our own.
Attending the EEF Manufacturers forum earlier this year, OEM’s continue to see barriers to exporting like IP theft, bad debt and legal protection. These are the key blockers to more exports, it’s more about acknowledging the fear that private sector business has and putting in measures to dissipate it. UKTI are doing a good job regionally in sharing stories of success and supporting export ambitious businesses.
A wave of new technological advancements – like 3D printing; graphene; and nanotechnologies create limitless opportunities for the North West to strike and seize its industrial capability to manufacture. The question is will we stand by whilst other faster moving cities over-invest; build capability and out-smart us?
The latest announcement of the ‘Tech North’ initiative by the Deputy Prime Minister is promising in terms of building a cluster of capability here in the North. Greater Manchester will naturally be a point of focus given our connectivity, population size and ability to work together. I’d like to have seen more money put behind this, perhaps a factor of x10 to show real intent.
Beyond the numbers and forecasts there are people. Entrepreneurs and businesspeople whose daily efforts aggregate to these numbers seen in the report today. Those people are often distanced from economic data, relying on the daily ebb and flow of the markets they operate in to determine their success. They are doing well – many would say – in spite of the landscape.
Those people are relying on you. They are asking right now – so what? What does this mean for me? What do I need to change? What are you planning to change? How can you support me?
My appeal to you all is to take some action. To pick something and do something. Take this data and make it real for those businesses in your local authority area; translate it, make it practical; real and actionable. They will thank you for it.
Like any averages they are a consolidation of the overs and unders. What are the characteristics of the over-performers? What can we do to replicate their success and help other businesses to innovate by turning their creative ideas into invoices?
In a recent study we did of 600 SME’s, technology was a real accelerator for fast growth businesses in realising their growth ambitions. Whether that be cloud computing, web conferencing or fast analytics – those that effectively deployed, outpaced their competition. 57% specifically cited technology as the key attribute of their success.
Growth relies on Leadership from all parties. We have to be more productive, more competitive and to invest in our potential. It’s time to review what we do and how we can do it better to stay in the race.
The decision to devolve Greater Manchester is significantly important and will ensure that we can change gear in accelerating our ambition. By having this power, we must determine ourselves as a powerhouse on the world stage, not just the UK stage.
We must move quickly and take advantage of the position of the pound; carve out our uniqueness of capability as a magnet for science, technology, digital, engineering, universities and biotech. Investing in our young people, universities and retaining regional talent.
The Manchester Growth company now delivers across a multiple portfolio of exporting; manufacturing; business start ups and business finance. Consolidating multiple services under one roof; the ‘one number’ to contact is what business wants.
Manchester still has a heavy reliance on the services economy. I fully agree with the strategy on economy re-balancing particularly given our manufacturing GVA only represents 8% of the whole.
In terms of what we need from the politicians? Politicians must cut red tape and make the backdrop one of speed, simplicity and reasoned structure but I’m always warned – one piece of red tape when cut gives you two pieces of red tape.
Is this the time for new measures of success? New Critical Success Factors which determine whether we are artificially pumping up our regional economy or creating lasting change.
Speaking to Vikas Shah – a visiting professor of entrepreneurship at MiT on Friday; he suggested GVI (Gross Value of Innovation) which measures patents in our regional economy. That would be a splendid outcome for a conference like this – to set new standards of success which drive key outcomes.
We need to collaborate; engage; educate; take dramatic action and determine a future for everyone in the region to prosper. The forecast predicts 109K net new jobs and an additional £17bn more GVA, yet it could be so much more if we choose to make it.
If this were a business plan we’d be sitting down to see how we smash those with a curiosity for the ‘What If’ scenario – it would be great to see them over-achieved.
Speech Delivered Tuesday 25th November 2014