City needs to focus on growth to aid economy

Michael Bear
AS we edge closer to this month’s Budget, the UK business community has been calling for a clear growth strategy that will help to turn austerity into prosperity.

The government has already taken tough decisions on dealing with the deficit by reducing spending – not easy in these challenging economic circumstances.

I was however pleased to hear Business Secretary Vince Cable shift the agenda by placing his focus firmly on growth when he spoke at last week’s Trade and Industry Dinner.

The City has been at the centre of world trade and industry for many centuries.

Indeed, Mansion House was built in the 18th century on one of the earliest places of commerce in London, the medieval “Stocks Market”.

We need to turn to these pillars of growth again. It is clear the private sector has a crucial role to play in delivering the investment, wealth creation and jobs needed to compensate for reduced public expenditure over the coming years.

The City already makes a huge contribution to the UK, accounting for 10 per cent of GDP, over £53bn into the Exchequer, 300,000 jobs in the City of London – and another three quarters of a million in financial services across the country.

The City also accounts for £42bn in net exports, half the UK’s deficit on trade and goods. And as CBI data shows, strong growth of financial services in the second half of 2010 helped to drive investment in the wider UK economy.

The City has the scale and liquidity to support both our largest firms and the 4.8 million SMEs across the country.

If even 20 per cent of these were to tap into the wealth of available opportunities and hire an extra worker the benefits for the economy would be immense.

Job creation is the best economic policy so we must pro-actively take the City’s offering to the world – particularly to the emerging markets.

Over the next five years, emerging economies are expected to account for over 50 per cent of global growth. Some have pointed out that capital in these markets is moving away from developed countries – especially New York and London. In fact, our competitors for business in emerging markets are often emerging markets themselves.

London is a natural location for trade and investment with these rapidly developing countries but we must persuasively continue to make the case. That is why I visited Turkey early in the New Year, and recently returned from two weeks in the Gulf States.

In many ways, British history is a story of trade and industry. Strengthening these longstanding relationships will be vital to writing a more prosperous future for the UK and the world.

Michael Bear is Lord Mayor of the City of London