What is the strategy for growing the UK economy to its potential?

The UK which is the world’s 6th largest economy, is projected to grow by 1.7% in 2011.  Growth in many developing economies will be 7% in 2011. Our expectation is that it will rise to the 2007 levels of 3% in a couple of years, so the economists say.  You see, I am no economist and do not know how these predictions are arrived at.  However, I do wonder at the assumptions that underly them.

In an economy with comparatively high GDP but which imports more than it exports, slow growth will mean increased national debt as expenditure exceeds income. There is already deep displeasure about the cuts in UK public expenditure, but there is more to come.  The logical solution is therefore to increase income earned from exports to achieve the predicted rise in economic growth. But where is this growth going to come from – what sector is positioned to produce the additional income? Will the economy grow from increased recycling of the existing funds or will overseas investors in the property market bring in enough funds to achieve the projected growth? What would need to be happening in the rest of the world for the inflow of such investment to drastically increase?  Will it be from high tech manufacturing for which the UK has competitive advantage but which is still on a smaller scale than is needed for a turnaround? The figures published today show that growth in manufacturing over April and May is essentially flat.

If nothing changes, nothing will change.  The UK has to identify a sector that has enough potential to compete with other countries in exportable products or services.  It has to be based on an existing cabability that could be extended by the government visibly investing in and encouraging training to build capability.

So how exactly can we optimise this potential? Building the basics from primary schools, giving positive messages about the desired careers, encouraging parents to guide children towards these careers, encouraging great numbers of start-up businesses in these industries and giving them real support until they either succeed or fail. I am not an economist but I can consider the future and wonder.

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