Eight challenges for the UK economy in 2011
Authors: Andrew Sissons
11 January 2011
2011 will be a crucial year for the UK economy. While we seem (hopefully) to have avoided the rhetorical 'economic dangerzone', people up and down the country are facing a series of painful shocks. The rise in VAT is already beginning to squeeze household incomes, while the full weight of spending cuts is set to bite from April onwards. But despite the austerity and the uncertainty, 2011 could still be a good year for the UK economy. After last year’s fitful and fragile recovery, 2011 offers an opportunity for Britain to lay the foundations for lasting prosperity over the next decade. The coming year will set the tone for several years to come – and what is needed is solid, sustainable and balanced growth.
To help chart this course to prosperity, our team of researchers have picked out eight key challenges for the UK economy in 2011:
1.Turning growth into jobs
Despite some promising growth in 2010, the labour market remains extremely fragile, with a rise in part-time and temporary jobs. In 2011, we need to see an increase in the number of good jobs, to begin bringing down unemployment.
2. Achieving an export boom driven by both manufacturing and hi-tech services
Although the pound has devalued by 25% since 2007, the UK still has a massive trade deficit. In 2011, the manufacturing and service sectors need to lead an export boom which is critical to rebalancing the economy.
3. Building a framework for more effective innovation
The UK needs to move beyond a reliance on finance and property, and become a truly innovation-led economy. This will require a new network of innovation institutions, led by the new Technology and Innovation Centres.
4. Creating the right graduates for the knowledge economy
With tuition fees set to rise for applicants at the end of 2011, continued expansion of the quantity and quality of graduates
is vital to the future of the knowledge economy.
5. The economic recovery needs to reach those who live in lagging regions
The economic recovery must reach all parts of the UK, to create sustainable prosperity that doesn’t leave places behind.
6. Protecting competition in the information economy
The rise of internet giants – such as Google, Facebook and Twitter – may introduce a new type of threat to competition in the creative economy. Market regulators will need to react quickly to this threat.
7. Achieving a public sector 'productivity miracle.'
With the public sector facing unprecedented budgetary pressures and job losses, the pressure is on to achieve a remarkable increase in productivity to prevent serious cuts to frontline services.
8. Integration – a key challenge for businesses
The rise of global communications technology has allowed firms to create complex networks and partnerships around the world. If the UK is to keep pace with businesses around the world, our firms must embrace integration and strategic partnerships.
All blog posts for this author