CONFIRMATION that the UK is slipping down the list of the world’s most competitive countries comes as no surprise but is a situation that surely must be remedied before irreparable damage is done to our economy.
The IMD World Competitiveness Yearbook identified the UK as falling one place to 22nd in the world rankings. Bearing in mind IMD’s definition of competitiveness involves the relative position of nations in the pursuit of prosperity, the report makes grim reading for the UK and therefore the City of London. Citing the “uncertainties of the post-election period” the closely-followed report highlights the dual challenges of the huge financial cost of the budget deficit crisis as well as the de-industrialisation of the economy. Other factors used to rank nations include trade and investment flows, employment figures, exchange rates and financial assets. Considering the UK fares badly on these measures, it is disastrous to think our competitiveness risks being further eroded by our tax regime and the looming EU hedge fund clampdown that may drive high earners out of the country.
But how big a problem is this? Will top bankers, fund managers and senior executives flee the UK in droves to escape an economy in turmoil?
Talking to headhunters is a good way to gauge the mood of a workforce. The picture is not as bleak as that presented by the IMD’s report. Certainly there are City workers who are concerned that higher taxes and spending cuts will be enough to force them to look elsewhere for jobs, one leading recruiter tells me. Another says the level of grumbling among his contacts has increased, but in reality they were unlikely to up sticks and set up home in an alien country.
London’s schools, culture, salaries and housing were all cited as key attractions of living and working in the capital. Few other international centres can offer such a compelling package. That means the current crop of City workers, particularly those with young families, will largely stay put. Those leaving equate to a trickle not a flood. Yet younger and more mobile workers will listen to job briefs from abroad, and talented foreigners are less likely to move for work here when they read horror stories such as that contained in the IMD’s Yearbook.