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UK needs to ‘leapfrog’ rivals to win in the new industrial age

06 November, 2017

The UK is in pole position to benefit from the fourth industrial revolution, reversing its poor productivity, lifting living standards and resulting in a fairer society – but seizing the opportunity will need a new kind of industrial strategy, the CBI has warned.

In a new report – entitled The UK’s Economic Future: A CBI Survey on Industrial Strategy  – the business organisation says that the opportunities are great, but so are the challenges. Up to 35% of jobs may be displaced by automation and artificial intelligence, it predicts. New ones will take their place, but will require a strategic approach to retraining. It needs to be long-term, rooted in a new “partnership of the century” between government and business, and crucially, it needs to be a “leapfrog” strategy, aimed at the UK overtaking competitors, not just catching up.

The report is based on a survey of more than 400 companies that shows there is strong consensus (82%) that the main pillars of the new industrial strategy need to be people, infrastructure and innovation. All three need to be transformed to power a new, modern economy. But uncertainty is taking its toll, with key concerns including the uncertain economic outlook (54%) and what post-Brexit trade will look like (39%)

The CBI is calling for the creation of an independent Industrial Strategy body, similar to the Office for Budget Responsibility, that could measure, advise and build confidence that this plan will last.

Regional industrial strategies are vital, it suggests. Each region of the UK has special strengths that can be unlocked by devolution and tailored strategies. To ensure no part of the UK is left behind, the CBI recommends the appointment of a regional commissioner to oversee delivery, regardless of local political structures.

“As uncertainty continues to bite on the UK economy, there has never been a more important time for the UK to unite behind a ‘leapfrog’ industrial strategy,” says CBI director-general, Carolyn Fairbairn. “The aim is to enable British firms to compete and win in the new technology age. It is also urgent. Change is coming at lightning speed and the world won’t wait for Britain.

“This means we can’t afford to let Brexit distract from the long-term action that is so badly needed,” she adds. “What’s at stake is the UK’s future in a global economy redefined by artificial intelligence and automation. Brexit must not be allowed to crowd this out.

“Firms agree on what matters most: transforming the UK’s skills base, modernising its physical and digital infrastructure, and accelerating innovation. But they also agree that catching up is not enough.

“A leapfrog industrial strategy is within reach, but not easy, and will require a partnership of the century between government and business,” says Fairbairn. “Nobody wants to have this conversation again in four years’ time, and jobs and opportunity won’t wait around.

“We look forward to the publication of the Government’s strategy and to working with them and across all parties to build an industrial strategy that can stand the test of time and improve lives across the UK.”

Some of the main findings of the CBI’s survey are that:

•  89% of the firms quizzed believe that a modern industrial strategy could be a significant opportunity to improve living standards across the UK by 2030;

Fairbairn: Change is coming at lightning speed and the world won’t wait

• people (28%), innovation (27%) and infrastructure (27%) will drive living standards across regions and sectors;

• risks to its successful implementation include: a lack of a long-term vision (35%); a lack of attention to industrial strategy by Government due to Brexit (29%); and a lack of cross-party buy-in (15%);

•  42% of firms believe that devolution is a significant enabler to making industrial strategy a success, with half (50%) stating that better collaboration between local authorities and business will be essential.

To deliver the industrial strategy successfully, the CBI is calling on the Government to:

•  build a new style of partnership between government and business, tasked with leapfrog thinking in skills and retraining, infrastructure and innovation;

•  set up a joint commission on artificial intelligence, involving both business and employee representatives, to better understand the impact on people’s lives, jobs and our future economic growth;

•  deliver on the recommendations laid out by the industrial digitalisation review, chaired by Siemens UK CEO Juergen Maier;

•  establish an independent Industrial Strategy Office to measure and monitor performance and give impartial advice on industrial strategy progress;

•  appoint an independent commissioner to ensure all regions of the UK have appropriate levels of devolution to deliver the Industrial Strategy; and

•  work across the party spectrum to ensure that strategy sits above political cycles.

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