Government and analysts may have championed manufacturing as the sector to lead Britain’s revival over the last two years but a new report from think-tank The Work Foundation says our efforts would be better spent on the business services sector.
In its ‘Britain’s quiet success story: business services in the knowledge economy’ report, the not-for-profit self-styled ‘leading independent authority on work and its future’ says that business services – encompassing knowledge based professions like law, engineering, accountancy and IT – now account for over a fifth of UK GDP, 11% of employment and £20 billion in net exports. Thus, it claims, these industries have ‘replaced manufacturing as the mainstay of the UK economy’ and collectively are twice its size in terms of output.
The report’s author, Andrew Sissons, says government’s focus needs to reflect this.
“As we’ve argued previously, manufacturing will continue to be hugely important for the economy, but it is unwise to pin all hopes for recovery on this sector to the detriment of the UK’s greatest economic strength,” he says. “Like it or not, business services have become the lifeblood of the UK’s knowledge economy and now account for twice the output of the manufacturing sector.
“But if the sector is to continue to thrive in the face of growing international competition, it needs stronger links with universities, greater numbers of highly skilled workers, a steady supply of graduates and a big push to increase service exports. The government must also ensure that the tax regime encourages businesses to invest in their knowledge base, or else we risk taking Britain back to a 1980s economy.”
The full report is available via The Work Foundation’s website.