UK Competitiveness Research Articles

Navigating Global Business: The UK's Economic Strengths, Competitiveness, and Post-Brexit Challenges

The UK is the sixth-largest economy in the world, renowned for its significant role in service exports and global trade. This article explores the UK's competitiveness in the global business environment, including price and non-price competitiveness, its reliance on international trade and investment, and its strengths and weaknesses. Despite challenges such as lagging productivity and insufficient IT innovation, the UK remains a key player in the global market due to its flexible labor market and favorable investment policies. The article also examines the profound impacts of Brexit on the UK's economy and its relationship with the EU, as well as solutions to address issues like tariffs, the financial system, and foreign investment policies in the post-Brexit era.

The UK Productivity “Puzzle” in an International Comparative Perspective

The UK’s slow productivity growth since 2007 has been referred to as a “puzzle”, as if it were a particularly UK-specific challenge. In this paper, we highlight how the United States and northern Europe experienced very similar slowdowns. The common slowdown in productivity growth was a slowdown in total factor productivity (TFP) growth; we find little evidence that capital deepening was an important independent factor. From a conditional-convergence perspective, most of the UK slowdown follows from the slowdown at the U.S. frontier. From the mid-1980s to 2007, the UK’s relative productivity level moved closer to the level of the U.S. and northern Europe, driven by essentially complete convergence in market services TFP. In contrast, manufacturing lost ground relative to the U.S. frontier prior to 2007, and remains far below the frontier. The relative ground lost after 2007 is modest—cumulating to about 4 percentage points—and is largely attributable to somewhat unfavorable industry weights and industry-specific issues in mining, rather than a systematic UK competitiveness problem.

Full Issue Download Vol. 13 No. 1 2021 The Importance of the Measurement Infrastructure in Economic Recovery from the COVID-19 Pandemic Richard J. C. Brown , Fiona Auty, Eugenio Renedo, Mike King NCSLI Measure | Vol. 13 No. 1 (2021) | doi.org/10.51843/measure.13.1.1 Publisher NCSL International | Published February 2021 | Pages 18-21 Abstract: This paper describes the many, evidenced-based benefits

Facilitating the uptake of established methodologies for risk-based decision-making in product conformity assessment taking into account measurement uncertainty by providing dedicated software is the aim of the European project EMPIR CASoft(2018–2020), involving the National Measurement Institutes from France, Sweden and the UK, and industrial partner Trescal (FR) as primary supporter. The freely available software helps end-users perform the required risk calculations in accordance with current practice and regulations and extends that current practice to include bivariate cases. The software is also aimed at supporting testing and calibration laboratories in the application of the latest version of the ISO/IEC 17025:2017 standard, which requires that“…the laboratory shall document the decision rule employed, taking into account the level of risk […] associated with the decision rule and apply the decision rule.” Initial experiences following launch of the new software in Spring 2020 are reported.

Pharmaceutical Industry Development in the Midst of Crisis: Global Trends

Purpose: the main purpose of the article was to study the trends in the global pharmaceutical industry, as one of the most knowledge-intensive in the world economy, against the background of the 2020 COVID-related crisis. The task was to study the impact of the economic crisis on the priorities of the largest pharmaceutical multinationals, to link them with trends in the restructuring of health care systems, as well as to analyze and assess the potential impact of Brexit on the European pharma industry, starting from 2021.Methods: the work is based on a comparative analysis of trends in the restructuring of global value chains in pharmaceuticals, the digitalization of pharmaceuticals and health care, as well as a quantitative analysis of the revenue and value added by the largest European pharmaceutical multinational companies.Results: the COVID-19 pandemic has accelerated the process of digitalization of big pharma; the intensified transition to a continuous production model can be expected in the coming years. Also, the second largest industry market, the EU-27, will suffer less from Brexit than the UK itself, and industries in developing countries will benefit from additional growth opportunities. The digitalization of healthcare remains an important underlying factor for the transformation of pharmaceuticals and further growth of innovation competition. This paper presents the problems of pharma and how to address them, as well as possible ways to restructure healthcare systems to reduce the likelihood of new pandemics – this will be at the heart of regulatory solutions in the medium term.Conclusions and Relevance: governments and state regulators will be actively involved in the process of recovery of the pharmaceutical industry after the crisis. For small regional pharmaceutical producers in developing countries there is a growing need to digitalize production and diversify supply chains. Implementation of continuous production technologies allows expecting growth in the number of small pharmaceutical producers, deepening competition in the industry. The Brexit deal will also have significant implications for the industry, leading to a restructuring of supply chains within the EU from early 2021, reducing the UK's competitiveness.

The Implications of Brexit for UK and EU Regional Competitiveness

Any form of Brexit will impact heterogeneously in terms of sectors and regions on the competitiveness of firms in both the UK and Europe. The ongoing uncertainty about the conditions under which the UK will be leaving the EU, creates difficulties in structurally estimating these impacts. Using uniquely-detailed interregional trade data on goods and services for the EU, we apply a novel methodology that disentangles region-sector sensitivities (elasticities) of firms’ competitiveness to (non)tariff barriers from the implications of different post-Brexit UK-EU trade scenarios. This enables us to derive the impact of Brexit on the competitiveness of firms along with the degree of uncertainty that surrounds these impacts, independently from the scenarios. Our analysis demonstrates that the adverse international competitiveness shocks on UK firms are much larger than those on the rest of the EU due to the dependency of the UK on the EU via global value chains. The competitiveness shocks mean that within the UK, Brexit is likely to increase both interregional inequalities and also intra-regional inequalities. In contrast interregional inequalities across Europe may actually fall, depending on the nature of the post-Brexit UK-EU trading arrangements.

The Implications of Brexit for UK and EU Regional Competitiveness

Any form of Brexit will impact heterogeneously in terms of sectors and regions on the competitive position of firms in both the UK and Europe. The ongoing uncertainty about the conditions under which the UK will be leaving the EU creates difficulties in structurally estimating these impacts. Using uniquely detailed interregional trade data on goods and services for the EU, we apply a novel methodology that disentangles region-sector sensitivities (elasticities) of firms’ competitive positions to (non)tariff barriers from the implications of different post-Brexit UK–EU trade scenarios. This enables us to derive the economic geography of competitive opportunities and vulnerabilities of Brexit of firms, along with the degree of uncertainty that surrounds these effects, independently from scenarios. Our analysis demonstrates that the adverse international competitive vulnerabilities of UK regions are much larger than those of the rest of the EU due to the dependency of the UK on the EU via global value chains. The impact on the competitive positions of firms means that within the UK, Brexit is likely to increase interregional inequalities. In contrast, interregional inequalities across Europe may actually fall, depending on the nature of the post-Brexit UK–EU trading arrangements. Moreover, the key political focus on the nature of the post-Brexit arrangements appears to be misplaced in that most UK regions are rather insensitive to the specific nature of the deal. As such, the economic geography implications of Brexit appear to be largely unrelated to UK domestic political narratives.

Breeding crops for the future

Breeding crops for the future

Tax Prats and Citizen Stakeholders

The 2010 UK coalition government set itself four priorities for tax policymaking: to make the UK tax system more competitive, simpler, greener and fairer. This study uses data from tax information and impact notes, a new application of impact assessment methodology, to assess progress towards these goals. Findings show in 2010–2013 a third of tax changes did not contribute to any of the goals, a quarter related to fairness and a fifth to simplification. Whilst competitiveness was poorly served in number of measures, it was significant in terms of tax foregone as a result, and external assessments of UK competitiveness mean it could be argued the objective has been achieved. Green measures were fewer than 7% of any fiscal event and the green objective has been quietly dropped. The article goes on to examine the differing understanding of tax objectives between tax professionals and the wider public and argues that othering non-professionals as ‘tax prats’ should cease in favour of inclusion of ‘citizen stakeholders’.

Regulatory competition as a social fact: Constructing and contesting the threat of hedge fund managers’ relocation from Britain

ABSTRACTConcerns about national competitiveness can undermine the prospects of enhanced financial regulation, as the threat of industry relocation makes states less willing to tighten rules. This logic seems applicable in the case of the European Alternative Investment Fund Managers Directive: in fear of managers relocating, the UK, which hosts almost the entire European alternative investment sector, successfully advocated a watering down of the proposed requirements. This paper, however, questions the origins of the – seemingly natural – British negotiation position. The empirical record confirms that the relocation threat is not a necessary fact imposed by a global logic of market forces, but a scenario constructed and contested both by the regulator and firms. The scale and imminence of the threat posed to the UK's competitiveness depends on the use and function of competing narratives about hedge fund managers’ relocation and these narratives inform the behaviour of both hedge fund managers and their regulator. The British authorities hence not only influence the degree of regulatory competition through acts of liberalisation, but also through their influence on dominant narratives. This means that regulatory competition is a social, not a brute fact, and that the associated power relationship between state and market actors is discursively produced.

Competitiveness and the post-regional political economy

This article seeks to examine how the changing institutional environment concerning local and regional economic development in Britain is related to the changing competitive fortunes of its localities and regions. Drawing on evidence from the UK Competitiveness Index, it is found that the institutional shift toward a post-regional political economy, particularly the demise of Regional Development Agencies and the introduction of Local Enterprise Partnerships, has coincided with an increased concentration of Britain’s economic competitiveness and growth capacity within London, in particular the City of London. Overall, there is found to be continuing divergence in competitiveness between England’s least and most prosperous regions and localities. In the devolved regions of Scotland and Wales, there is little evidence to indicate that their localities are competing any more effectively with their English counterparts. It is suggested that the most effective role for economic development institutions is to act as a guiding light to ensure sustainable local and regional economic models are established.

Entrepreneurial Universities – The Key Ingredient in the Recipe for UK Innovation?

This study of 15 UK universities explores the reality of university–industry liaison and service delivery roles. Contextualized within the role of universities in innovation and knowledge transfer, it confirms the views of previous analysts that tensions result from imposing third mission activities on organizations established for other purposes. Policy makers need to address the heterogeneity of the higher education sector if they are to achieve success with regard to UK competitiveness. Such an approach will include the recognition that internal collaboration may be actively discouraged while external links are simultaneously emphasized in institutional mission statements. Also, successful business engagement requires a flexible and responsive culture and an emphasis on external collaboration.

The UK productivity gap in the service sector: do management practices matter?

Purpose – This paper aims to contribute to the debate on the drivers of the productivity gap that exists between the UK and its major international competitors. Design/methodology/approach – From the macro perspective the paper explores the quantitative evidence on the productivity differentials and how they are measured. From the micro perspective, the article explores the quantitative evidence on the role of management practices claimed to be a key determinant in promoting firm competitiveness and in bridging the UK gap. Findings – This study suggests that management practices are an ambiguous driver of firm productivity and higher firm performance. On the methodological side, qualitative and subjective measures of either management practices or firm performance are often used. This makes the results not comparable across studies, across firms or even within firms over time. Productivity and profitability are often and erroneously interchangeably used while productivity is only one element of firm performance. On the other hand, management practices are multi‐dimensional constructs that generally do not demonstrate a straightforward relationship with productivity variables. To assume that they are the only driver of higher productivity may be misleading. Moreover, there is evidence of an inverse causal relationship between management practices and firm performance. This calls into question most empirical results of the extant literature based on the unidirectional assumption of direct causality between management practices and firm performance. Research limitations/implications – These and other issues suggest that more research is needed to deepen the understanding of the UK productivity gap and more quantitative evidence should be provided on the way in which management practices contribute to the UK competitiveness. Their impact is not easily measurable due to their complexity and their complementary nature and this is a fertile ground for further research. Originality/value – This paper brings together the evidence on the UK productivity gap and its main drivers, provided by the economics, management and performance measurement literature. This issue scores very highly in the agenda of policy makers and academics and has important implications for practitioners interested in evaluating the impact of managerial best practices.

In-vivo skills and UK competitiveness in biomedical sciences

In-vivo skills and UK competitiveness in biomedical sciences

The Unmovable Elephant: Germany and the UK's Competitiveness Jungle

During the 1980s there existed a deep fascination in the UK with what makes Germany successful. This has dissolved somewhat in the last 15 years as Germany has struggled with the challenges of reunification and globalisation. Since 1997 the UK has focused on the drivers of productivity and wealth creation in the interests of closing the ‘productivity gap’ with the US. In contrast, productivity improvements in Germany have been regarded as something of a ‘luxury problem’ for policy makers who have had to facilitate systemic change in eastern Germany and adaptation in the old Länder. This paper looks at the systemic adaptation in Germany from a UK perspective and argues that, although structural reform still has some way to go, the endogenous growth drivers of the German economy are strong, and visibly stronger than in the UK. It is argued that commentators and policy makers alike have been ignoring the real issue in the debate about the future of the German economy.

Developing an Entrepreneurship Culture

Entrepreneurship is increasingly relevant to economic output and job creation in both developed and developing countries. It is especially important for the UK, so as to reverse a century of relative economic decline. This paper discusses the UK government's policy on entrepreneurship, and the objectives it has set for higher education institutions. It then goes on to present the initiatives taken by the University of Greenwich to develop an enterprise culture, both within and with the wider community. The paper focuses on the role played by the University's Centre for Entrepreneurship in helping it to contribute towards the UK's economic development and competitiveness. The conclusions reached indicate that higher education institutions need to behave entrepreneurially at both the staff and student levels in order to build an enterprise culture. Staff need to be bold in taking initiatives to seek out processes that can help shift the established paradigm and to introduce new content to achieve breakthroughs in the culture. This is also required to engage students and to help build their personal intangible assets as much as to facilitate them in starting up new enterprises.

UK Economy Forecast

Following a period of weakness, economic growth has been sustained for three quarters only a little below trend and appears to be gaining momentum (figure 1). We expect to see a further acceleration in growth, resulting in growth per annum of 2½ per cent this year and 2¾ per cent per annum in 2007 and 2008. Robust growth ahead is supported by the strength of external demand and small improvements in UK competitiveness. Demand is also supported by sharp rises in equity prices over the recent past. On the supply side, strong labour force growth is central to the near-term outlook.

The Sterling Effective Exchange Rate and Other Measures of UK Competitiveness

Movements in exchange rates attract much attention, both for the signals they may contain about future inflation prospects and for their implications for the competitiveness of firms. However, movements in bilateral exchange rates, for instance in sterling against the dollar or the euro, do not convey enough information for either policymakers or for firms except in relation to specific bilateral transactions. It is useful to construct summary measures of exchange rate movements, and there are a number of ways of doing this. The choice of measure depends upon the use to which it is to be put. Some measures, such as the effective exchange rate, are summary indicators, whilst others such as export competitive indices are more relevant when evaluating the prospects for export developments. Some indicators weight together nominal exchange rates. Others are measures of real exchange rates, weighting together exchange rate adjusted relative prices. The indicators chosen should be seen in the context in which they are used.

UK Commercial Property Lease Structures: Landlord and Tenant Mismatch

UK commercial property lease structures have come under considerable scrutiny during the past decade since the property crash of the early 1990s. In particular, tenants complained that the system was unfair and that it has blocked business change. Government is committed, through its 2001 election manifesto, to promote flexibility and choice in the commercial property lettings market and a new voluntary Commercial Leases Code of Practice was launched in April 2002. This paper investigates whether occupiers are being offered the leases they require or whether there is a mismatch between occupier requirements and actual leases in the market. It draws together the substantial data now available on the actual terms of leases in the UK and surveys of corporate occupiers' attitude to their occupation requirements. Although the data indicated that UK leases have become shorter and more diverse since 1990, this is still not sufficient to meet the current requirements of many corporate occupiers. It is clear that the inability to manage entry and exit strategies is a major concern to occupiers. Lease length is the primary concern of tenants and a number of respondents comment on the mismatch between lease length in the UK and business planning horizons. The right to break and other problems with alienation clauses also pose serious difficulties for occupiers, thus reinforcing the mismatch. Other issues include repairing and insuring clauses and the type of review clause. There are differences in opinion between types of occupier. In particular, international corporate occupiers are significantly more concerned about the length of lease and the incidence of break clauses than national occupiers and private-sector tenants are significantly more concerned about leasing in general than public-sector occupiers. Proposed solutions by tenants are predictable and include shorter leases, more frequent breaks and relaxation of restrictions concerning alienation and other clauses. A significant number specify that they would pay more for shorter leases and other improved terms. Short leases would make many of the other terms more acceptable and this is why they are the main concern of corporate occupiers. Overall, the evidence suggests that there continues to be a gap between occupiers' lease requirements and those currently offered by the market. There are underlying structural factors that act as an inertial force on landlords and inhibit the changes which occupiers appear to want. Nevertheless, the findings raise future research questions concerning whether UK lease structures are a constraining factor on UK competitiveness.

Creating a UK Competitiveness Index: Regional and Local Benchmarking

HUGGINS R. (2003) Creating a UK competitiveness index: regional and local benchmarking, Reg. Studies 37 , 89-96. This article assesses the relative economic competitiveness of regions and localities in the UK by constructing a single index that reflects, as fully as possible, the measurable criteria constituting "area competitiveness'. Other studies and research on competitiveness within the UK have measured relevant factors in isolation, and have not sought to produce an overall composite index at either a regional or local level. This article aims to go some way to filling this gap. The UK Index of Competitiveness highlights the unevenness of economic fortunes in the UK and the strong possibility of the gaps widening even further.

UK Competitiveness Policyvs. Japanese Industrial Policy

It is often claimed that Japanese 'industrial policy' targeted high growth or high productivity growth sectors (see, inter alia, Johnson, I982; Carliner, I986; Nester, I99I; Tyson, 1992). It is then argued that because both the targeted industries and the Japanese economy have prospered, it follows that Japanese industrial policy must have been successful. Hence, Britain, and other advanced nations, either are justified in emulating, or should hasten to follow, the Japanese example. This raises the question of whether the United Kingdom's ' competitiveness policy' is the appropriate response or is a completely different animal. The purpose of this paper is to explore the main areas in contention, but before doing so it is important to be clear about what one means by industrial and competitiveness policies.