As the UK approaches its general election on 4 July, businesses and local governments are looking at how changes in government policies could help boost inward investment, productivity and growth.
One body delving into what needs to be done for businesses to prosper across the UK is the Institute of Economic Development (IED), a professional body for economic development professionals.
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Like the political parties, the IED has launched its own manifesto. Entitled Grow Local, Grow National, it calls for councils to be given statutory powers over economic development.
Speaking on GlobalData’s Thematic Intelligence podcast, Nigel Wilcock, executive director of the IED, stated that “it’s clear the new government needs to set a clear, steady and consistent path” to boost inward investment, productivity and growth alongside addressing net-zero goals.
The need for consistency
Assessing the state of the UK economy, Wilcock said he felt that the financial position of the economy has been eroded by heavy spending as a result of the pandemic as well as by Brexit, high inflation and the cost-of-living crisis. This, he argues, has resulted in low growth and a lack of investment in the economic infrastructure.
“I think we’ve suffered over the last decade or so with all sorts of measures being introduced and then being pulled off the table, we’ve not had a consistent approach to economic developments,” said Wilcock.
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By GlobalDataHe added that part-cancelled plans for the UK’s HS2 high-speed rail project and the withdrawal by the UK from several green policies have created a confusing environment for businesses looking to invest.
“There are many, many people who will have been looking at new locations and opportunities arising from HS2, and then, all of a sudden, an apparent government policy is removed from the table,” he said.
Similarly, on the topic of net zero, Wilcock commented: “If the government changes its approach to and its objectives and its targets around low carbon, then all of a sudden, those companies who are looking to make significant investments are put off from doing so.”
“I think all political actors need to stick with the announcements that they make, we can’t have a situation where an apparent set of infrastructure has been announced and then doesn’t go forward.”
Devolution
The IED’s manifesto states that giving local authorities legal duty over economic development would create an accountability structure, fostering stability and encouraging investors.
Wilcock noted though that “the UK is enormously centralised,” with the focus on London skewing the agenda of the national economy. He believes that a lack of consideration of strengths and opportunities in different regions across the country means that the UK isn’t making the most of what each different region could achieve both for the economy and net zero.
He pointed to opportunities in offshore renewables in the north and in nuclear power in the west, but he believes plans lacking regional understanding mean these opportunities are not being taken advantage of.
“To seize the real strengths of those regions and understand the investment that needs to be made, that’s really best done at a local level,” Wilcock said.
The IED’s manifesto also calls for skills activation, seeking powers for local governments to train and upskill people in their local areas and to partner with local employers. This suggestion is an attempt to address the low productivity levels seen across the UK, which Wilcock argues could be addressed by improving attractiveness for inward investment.
