Economic Progress

The hidden toll that Brexit is already taking on Britain

Anti-Brexit protesters shelter from the rain outside the Houses of Parliament, after Prime Minister Theresa May's Brexit deal was rejected, in London, Britain, January 16, 2019. REUTERS/Henry Nicholls - RC1197B73EC0

Stormy times for the economy: Anti-Brexit protesters in London Image: REUTERS/Henry Nicholls

Rain Newton-Smith
Chief Executive, Confederation of British Industry (CBI)
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Economic Progress

This article is part of: World Economic Forum Annual Meeting

As the guiding principles of this year’s World Economic Forum suggest, addressing the biggest global challenges requires the collaborative efforts of business, government and civil society. As Chief Economist at the CBI, the UK’s leading business organisation, I couldn’t agree more. The current biggest test for the UK is avoiding a no-deal Brexit which would be catastrophic for our economy, for jobs and livelihoods around the UK. Now is the time for politicians to come together to lead the country away from the cliff-edge of no deal.

But Brexit brings with it another real challenge, as it drains capacity from the UK government to tackle other issues, including the ability of business to invest in new technologies and skills that will transform all our lives.

At the CBI, we bring business leaders from across all sectors together with policymakers to help create a fairer, more inclusive and prosperous society. Providing more opportunities across all regions and nations of the UK is something business is passionate about, particularly since the UK has among the highest regional inequalities in Europe.

To understand what is driving differences in standards of living across the UK, the CBI led a landmark study Unlocking Regional Growth, published six months after the UK’s vote to leave the European Union. The report found four main drivers of productivity differences: educational attainment at age 16; better physical and digital links between our cities and towns; management practices; and the proportion of firms that export and innovate.

It really brought home to me the importance of education in preparing young people for our changing economy. Whether the route is university, college or an apprenticeship; education is vital for increasing social mobility. Here the role for businesses is clear. One example is supporting great initiatives like TeachFirst, which places specially trained teachers in areas where average income tends to be lower. Others include enhancing careers advice in schools, through the Careers and Enterprise Company, and ensuring internships are paid and available to everyone on an equal basis.

Global challenges

But business also has a vital role to play in addressing global issues such as migration and climate change, which is why bringing world leaders together is so important. The number of refugees has risen dramatically in recent years, mostly because the Syrian civil war and other conflicts have forced millions to flee their homes and seek refuge in neighbouring countries and across Europe.

According to the UNHCR, there are now nearly 70 million forcibly displaced people, around 1% of the world’s population. At the same time, in Europe, skill shortages are rising and the population is ageing. Yet many of those displaced are prevented from using their skills to contribute to the countries hosting them. They are often keen to earn a living and participate in the society that they live in.

There is much more host countries can do to make it possible for asylum seekers to work. That’s why the CBI is supporting the Lift the Ban coalition’s #Lifttheban campaign, led by Refugee Action and Asylum Matters, which aims to overturn the effective UK ban on asylum seekers gaining employment.

While it’s true that allowing asylum seekers to become economically active is good for community cohesion and integration; much more than that, it’s the right thing to do. Employment is good for self-esteem and allows people fleeing violence, or the threat of violence, the financial independence to provide for their families.

Now consider climate change. Business has a vital role to play here too, providing much-needed innovation and investment to develop more sustainable routes to a low carbon economy. The UK has committed to reducing carbon emissions by 80% by 2050, and business is keen to play its part in meeting this landmark. This is especially important when most serious studies suggest the implications of a warming planet will include significant shifts in population movement.

These two factors – migration and climate change – underscore the need for greater and more successful international cooperation between all actors able to help alleviate the globe’s greatest challenges.

While latest figures available from the World Bank show fewer people are living in extreme poverty globally, in both developed and developing countries, there is ample evidence of growing inequalities. It’s been well-documented how this has given rise to populism, threatening institutions tasked with providing peace and prosperity.

Only with more meaningful dialogue – between employees, employers, international institutions and countries – will global threats be successfully confronted. We all have a responsibility to ensure the generations that follow us are better off. And only by working together can businesses, governments and other organisations make this a reality.

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