So where will the main opportunities for future growth come from? Look closely and you will see three sectors whose economic benefit to the UK by 2020 will be worth nearly £300bn. That’s fintech, investment in our national infrastructure, and the opportunity to reshore jobs back to the UK from emerging markets.
Let me start with fintech. The UK market is one of the most attractive for fintech in Europe, it is worth around £20bn in revenue annually, as EY’s report for UKTI showed, and is growing fast. What is unique about the UK is the combination with consumer appetite for innovative products and services. The UK already has one of the highest levels of internet and mobile phone penetration globally, the highest e-commerce spend in Europe, and is currently leading in innovative, technology-driven access to financial services.
In addition, the UK’s position as one of the world’s pre-eminent financial centres has allowed it to attract the most innovative and ambitious startups from across the globe. The government has already opened lots of doors for the fintech industry, and if we concentrate our efforts on improving access to capital and leading the agenda on data privacy and protection, this community should really flourish in the UK.
Then there is the opportunity to update our national infrastructure, either by upgrading existing projects or developing new ones. With £250bn in the government’s latest National Infrastructure Plan, the prospects for growth from this sector are enormous. New roads, rail links, and faster and more secure broadband will not only help the UK compete on the global stage for its share of foreign investment, but will have a direct, positive impact on job creation. And other sectors of the UK economy such as business services and consumer goods will benefit from the trickledown effect too.
Lastly, there is a unique opportunity to recover some of the ground lost to emerging markets in the last few decades by reshoring parts of UK businesses from overseas. Research that EY has commissioned estimated that, between 1995 and 2011, the UK offshored 550,000 manufacturing jobs and 150,000 associated services jobs. That is a higher proportion of manufacturing activity than any other developed country, amounting to around $50bn (£31.6bn) of manufacturing activity.
We have already seen examples of companies bringing their production back to the UK. With the right strategy in place, we have identified the potential for reshoring to allow the UK to create up to 275,000 new jobs in manufacturing and associated services by 2025. What better way to tackle youth unemployment and add more value to our economy?
So there you have it. Three sectors that already play a big part in the UK’s economy can, with the right focus and strategy, unleash opportunities too tempting and too big to resist.
Steve Varley is EY’s UK chairman and UK & Ireland managing partner.