How business can lead a new era of wealth creation
UK Futures is our strategic campaign to help address the ongoing challenges facing the UK economy through a strategic discussion on the role for business in wealth creation.
To date, the growth debate has focussed on supply side measures, but UK Futures looks beyond government stimulus and consumer spending which are now largely depleted as sources of growth in the UK economy. We therefore argue that business must leverage its capabilities and resources to lead a new era of wealth creation.
In the first phase of the campaign, we have identified three future Growth Engines to kick-start the process of driving future wealth creation in the UK economy:
- Business ecosystem – a modified British business ‘ecosystem’ is vital to reignite long-term growth, and act as the ‘glue’ to bind business and its stakeholders across the UK together. There are four key elements to this new ecosystem: a reinvigorated entrepreneurial spirit, a new generation of UK giants, more diverse ownership models, and realigned tax policies. The ball is in business’s court in building these bridges and restoring public trust.
- iB2B (International Business to Business) – the UK has a broad, world-class service B2B sector – from wholesale financial services, to the Lloyd’s insurance market, to media and advertising, architecture and construction, and professional, legal and risk services. This rich vein of expertise already creates significant revenue for the UK: in 2010, the sector generated exports of around £44 billion and had a trade surplus of nearly £21 billion. We estimate the global value of B2B services was worth $2.97 trillion in 2010, highlighting the opportunity to export UK expertise across a wider group of markets.
- iB2C (International Business to Consumer) – consumer demand in emerging economies represents the single greatest opportunity for British companies. The rise of middle class consumers in emerging markets continues, with around one billion individuals in 2012. Many British brands are coveted in these markets and. London 2012 is already giving Brand Britain a welcome boost. More than 60% of Chinese and Indian consumers surveyed by Deloitte say they are likely to buy more British products.
As part of the research underpinning this report, we have identified 1,000 British businesses – the UKF100 – with turnover between £30m and £1bn, which generated a staggering 55% growth in revenues in the past three years, accounting for 7.8% of GDP last year, underlining what the corporate sector can achieve. If these businesses grew at the same rate over the next three years, they would generate an extra £61.3bn of revenues by 2014, equivalent to 4.3% of GDP.
The UKF1000 have created nearly 170,000 jobs since 2008 – the equivalent of the population of Swansea – during a period when overall UK employment fell by 1.3%. To put this into perspective, if this same rate of employment growth was achieved across the UK private sector it would eliminate UK unemployment in a single year.
The UKF1000 illustrate the growth opportunities outlined in UK Futures and give a glimpse into the way that the UK economy may be rebalancing. Over the coming months the phase 2 of our strategic campaign would conduct detailed research with these companies to identify their opportunities and challenges, articulate the core drivers that would enable British businesses of all sizes to succeed in the new decade and propose a medium to long term wealth creation roadmap for the business sector as a whole.
- Download the full report (PDF)