Accessibility links

So the IMF now agrees with practically everybody else that growth in the UK is going to look much more sluggish this year than expected. Cue a round of political ping-pong between the parties and yet more debate about whether the cuts are good or bad for the economy.

So the IMF now agrees with practically everybody else that growth in the UK is going to look much more sluggish this year than expected. Cue a round of political ping-pong between the parties and yet more debate about whether the cuts are good or bad for the economy.

Leaving aside the confusing irony that everyone is arguing about forecasts as though they are facts when those forecasts are merely revisions of previous forecasts that turned out to be wrong (maybe), there could be a deeper problem here.

It's a problem highlighted by the law firm DLA Piper that has just published the first of three reports on how "traditional business models" are being challenged by the online world.  The report shows straightforwardly how the internet is making factors such as business size less relevant and product authenticity more so.

Admittedly, this is only the first offering but I hope the next two reports are able to communicate more clearly quite how significant the changes are. For as Matthew Lockwood and I explored in a recent pamphlet, the rise of Web 2.0 does not merely demand new business strategies but will ultimately demand a totally new way of doing business.  And the core of that shift is to recognise that the once firm dividing line between producer and consumer has broken down. Consumers increasingly expect and have the resources and skills to design, shape, manipulate and even sell the products and services they purchase.

This matters enormously to the future growth of the UK economy.  The major technological transformations that capitalism has experienced since the mid-eighteenth century - such as  the growth of railways and canals, the use of electricity, the rise of mass production - have tended to focus on manufacturing.  Web 2.0 is the first general purpose technological transformation that is revolutionising the service sector and this is of course where the great bulk of the UK's GDP growth comes from.

Unfortunately, our record on dealing with previous technological transformations is not strong: the UK never became a very good mass producer in the first half of the 20th century, nor did it do very well in adopting flexible production techniques in the second half - perhaps the major reason why we became so dependent on the service sector.  If we miss this boat, however, there really isn't another sector to turn to.

Which brings us back to the current rather short-term debate about growth.  Of course, it is vital that we have the right policies to boost our growth rate over the next year or two but it will in the end be for nothing if we haven't identified the right public policy framework and business practices to sustain growth in the next decade or two.  With the development of our new strand of work on enterprise and innovation , I hope the RSA can do its bit to identify and promote these new policies and practices.  In the meantime, a debate from our political leaders that looks beyond the next twelve months whenever these forecasts hit the headlines might be a start.

Comments

Be the first to write a comment

Please login to post a comment or reply.

Don't have an account? Click here to register.