2018: The year for action
It’s been another eventful year for UK businesses, but more heavy lifting is needed over the next 12 months for the sake of the UK’s economy
Certainty, predictability and calmer politics were all on our Christmas wish list for 2017, but it was not to be. The year soon turned into another rollercoaster ride, full of jaw-dropping twists and turns right from the start. Firms have responded with resilience but there’s no doubt that the impact of uncertainty has taken its toll.
While the global economy enjoyed a boom, the UK economy shifted down a gear, with 2017 GDP growth of around 1.5 per cent compared with 2.3 per cent in 2016. We know from members that investment was postponed and in some cases halted. Order books for manufacturers ended the year in good shape, but inflation of 3 per cent has bitten on living standards and affected retailers and other consumer firms. International investors love doing business in the UK but end the year longing for greater clarity.
Brexit: a brighter end to a stormy year
Thankfully, the year has ended with some good news on Brexit. We all breathed a sigh of relief when in mid-December, the EU Council confirmed that trade talks can now begin and a status quo transition has been agreed in principle.
Politics will need to work on business timescales if we are to get the right result for the country
But even harder work lies ahead. To keep jobs and investment in the UK, binding Brexit transition terms by the end of the first quarter need to be accompanied by progress on a framework for a final deal that delivers barrier free trade with the EU.
We will continue to work behind the scenes and in public where necessary to stress urgency and the need for a clear strategy. Politics will need to work on business timescales if we are to get the right result for the country.
The domestic agenda: welcome progress
While Brexit is the top political and economic issue of the day, it is only part of the picture. Many of the fundamental building blocks of our economy – skills, innovation, infrastructure – are firmly within our control. And the transformational challenges of our age, such as artificial intelligence, digital and low carbon, amplify the need for urgent action. Ensuring domestic priorities stay high on the government’s agenda has been a key theme of our year.
And there has been welcome progress. The Industrial Strategy, published last month, represented “a decent first step”, as my colleague Josh Hardie put it. The key now will be delivery, especially via the new regional industrial strategies and sector deals.
The two Budgets of the year were broadly good for jobs, growth and investment, with the Chancellor announcing reform of business rates, a £500m investment in technical education to introduce new 'T-levels', a £1.7bn fund to improve transport in English cities and a commitment from government to work with employers to evolve the Apprenticeship Levy.
Priorities for 2018: heavy lifting on the foundations of the economy
This is all good progress but we should be under no illusion about the scale of heavy lifting needed in 2018. The world around us is transforming. While the UK is consumed with Brexit, China is building a global infrastructure through One Belt One Road while other nations are seizing the opportunities of the fourth industrial revolution. The world won’t wait for Britain.
2018 must be a year of unity, clarity and urgency, at home as well as on Brexit. We must get on, at speed and with great determination, with adapting our economy for the future.
The clock may be ticking on Brexit but it is ticking just as fast in our schools, colleges, universities and workplaces
The top priority must be the urgent transformation of our skills base. The clock may be ticking on Brexit but it is ticking just at fast in our schools, colleges, universities and workplaces.
The UK is facing a skills emergency. Weaknesses in supporting young people into the labour market have existed for years, but the changing nature of jobs and skill needs have turned the situation critical. The CBI will be campaigning for reformed careers advice in schools and to ensure every young person gets quality guidance and at least four interactions with working life by the age of 16, in every nation of the UK. We will also champion the effective delivery of higher quality technical education, including T-levels in England, a reformed apprenticeship levy and real progress on adult reskilling.
In parallel, we need more practical action to support innovation in 2018. We will work with businesses and universities to improve the UK’s approach to commercialising the leading-edge research we deliver so successfully. At the same time, action is needed to ensure companies adopt tried and tested technologies that will move the dial on productivity, as we set out in the CBI’s recent paper. You can expect a drumbeat of activity from the CBI on innovation throughout 2018.
Meanwhile, planned infrastructure projects must be delivered on time and efficiently throughout the year. Making progress on the big projects is essential – Heathrow, Hinkley and High Speed Rail. We will keep up the pressure but local delivery aligned to regional economic plans is equally important. The pipeline is there – now the taps need switching on.
So, quite a year and undoubtedly more change on its way. But one thing is certain – business has a vital role to play in building a bright future for our country. The CBI and the thousands of firms we represent look forward to working in close partnership with a united government to improve lives for everyone in 2018.