What decisions could the UK actually take to avoid managed decline?

[yorksrob]

In my field, this country is world-leading - just today I helped clients from Singapore in the East to California in the West. To stay ahead, we need a well educated workforce, we need a stable and predictable set of laws and we need taxes that are stable and not excessive relative to the rest of Europe. Switzerland isn't the risk (too expensive, too dull, short of workers) but some jobs are being offshored to Poland and India.

Being a "province" isn't always bad - a UK element of a world-class company that's American, German, Japanese or whatever may be better than a second-rate British company. And in some industries (mine included) you need to be global.

I agree that there can be issues around certain types of foreign owner. Personally, I wouldn't allow a CCP-affiliated entity anywhere near UK infrastructure, for example.

I just hope you're not publicly listed, otherwise you'll be gone before too long.

 

[Gostav]

I dunno. Try walking through Edinburgh in the summer, nothing but Americans, Canadians and Chinese as far as the eye can see.

The problem is that for tourism industry, generally most of the places that attract tourists are internationally renowned, such as the main cities of the UK (London, Manchester, Edinburgh, Glasgow, etc.) and well-known places (such as Oxford and Cambridge). You many difficult to find any international visitor along the Barton Line where really need visitor. Tourists are unlikely to help such marginal areas.

 

[Broucek]

I just hope you're not publicly listed, otherwise you'll be gone before too long

r-i-g-h-t…….

 

[DynamicSpirit]

Fair point. But how do we stop you doing a Cadbury and going back on your word and relocating your jobs to Switzerland. Foreign ownership reduces us to a province.

In exactly the same way you'd stop a fully-British-owned company from doing the same thing: By providing a good enough business environment that a business would have no reason to want to incur the expense and disruption of relocating jobs. (Of course, if it's a takeover accompanied by jobs promises, which I think was true of the Cadbury saga, you may in specific cases also want to get those promises in writing as a contractual obligation).

That aside, we have the situation where companies linked to Communist governments are being allowed to buy British companies willy-nilly. Do you find that acceptable ?

That kind of thing needs to be dealt with separately - using sanctions plus other restrictions on organisations linked to specific Governments/etc., where there are security concerns. Same as we do with - for example - Iran and North Korea.

 

[deltic]

Fair point. But how do we stop you doing a Cadbury and going back on your word and relocating your jobs to Switzerland. Foreign ownership reduces us to a province.

According to the Office for National Statistics foreign investors own £2,002bn worth of UK companies and UK companies own £1,769bn worth of companies overseas.

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I just hope you're not publicly listed, otherwise you'll be gone before too long.

These type of companies are valued at many billions - not many companies are big enough to take them over

 

[yorksrob]

In exactly the same way you'd stop a fully-British-owned company from doing the same thing: By providing a good enough business environment that a business would have no reason to want to incur the expense and disruption of relocating jobs. (Of course, if it's a takeover accompanied by jobs promises, which I think was true of the Cadbury saga, you may in specific cases also want to get those promises in writing as a contractual obligation).



That kind of thing needs to be dealt with separately - using sanctions plus other restrictions on organisations linked to specific Governments/etc., where there are security concerns. Same as we do with - for example - Iran and North Korea.

I don't care whether there are security concerns or not. I don't want an authoritarian, communist regime influencing the British economy, whether it's a direct military threat or not. The Communist influence is enough of a threat to stop communist state earned companies a place, as far as I'm concerned.

 

[Broucek]

According to the Office for National Statistics foreign investors own £2,002bn worth of UK companies and UK companies own £1,769bn worth of companies overseas.

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Exactly!

These type of companies are valued at many billions - not many companies are big enough to take them over

Thanks. Many 10s of Billions in the case of my employer…. And in any case (as I’m sure you know but others seem not to realise) being taken over is not necessarily a bad thing! Sometimes being part of something bigger provides investment, knowledge sharing and customer access that make the combined entity better than the sum if its parts.

 

[ainsworth74]

If company A persists in making huge profits then company B (C,D etc) will come along and undercut them.

Though increasingly Company A has used its huge profits to buy companies B, C and D to make sure that they can never be a threat.

See the tech sector for a recent examples of this behaviour...

 

[yorksrob]

Basically, the more self-sufficient Britain is in its basic needs, the less exposed we are to enemy powers.

 

[DynamicSpirit]

Basically, the more self-sufficient Britain is in its basic needs, the less exposed we are to enemy powers.

You don't necessarily need to be self sufficient to achieve that. In most cases, it'd be enough to make sure that whatever basic supplies you need are sourced from enough different other countries that you could get by if any one single country (or single bloc) went rogue and suddenly stopped supplying you.

If every country tried to be completely self sufficient, that would basically be the end of international trade, we'd all become poorer (due to losing the efficiencies that come from countries specialising in what they are good at), and without trade interdependency, conflicts and wars would become easier to start - which could make them more frequent.

 

[Gostav]

If every country tried to be completely self sufficient, that would basically be the end of international trade, we'd all become poorer (due to losing the efficiencies that come from countries specialising in what they are good at), and without trade interdependency, conflicts and wars would become easier to start - which could make them more frequent.

This has already started on the Internet, where some US and Japan websites have been inaccessible in the UK since new information laws were enacted. I'm wondering if this is a start?

 

[johncrossley]

Basically, the more self-sufficient Britain is in its basic needs, the less exposed we are to enemy powers.

Why do you think a common market for coal and steel was created in Europe after World War 2? Precisely to force interdependence between countries to try and prevent war.

 

[Gostav]

Why do you think a common market for coal and steel was created in Europe after World War 2? Precisely to force interdependence between countries to try and prevent war.

After World War II, such countries in Europe faced competition from real "big countries" such as the United States, Russia, China (and possibly India in the future), and these countries have their own single market with vast territory and rich resources. The single market can maximize Take advantage of industrial production. For example, any kind of EMD locomotives is pruduced in thousands; China Railway QJ steam locomotives have produced more than 4,000 units. Such output can reduce the cost to a very low level, which is impossible if they are small countries. The Europeans finally realized their gap and tried to unite, without the EU, the UIC and other Europe standard would not have been possible.

 

[The Ham]

After World War II, such countries in Europe faced competition from real "big countries" such as the United States, Russia, China (and possibly India in the future), and these countries have their own single market with vast territory and rich resources. The single market can maximize Take advantage of industrial production. For example, any kind of EMD locomotives is pruduced in thousands; China Railway QJ steam locomotives have produced more than 4,000 units. Such output can reduce the cost to a very low level, which is impossible if they are small countries. The Europeans finally realized their gap and tried to unite, without the EU, the UIC and other Europe standard would not have been possible.

It's a bit like the difference between a household being self sufficient and a village being self sufficient. There's going to be better economies of scale at a village level vs the household level.

If every house has to produce grain and mill it's own flour for bread and then bake it there's lots of inefficiencies. Even just on the baking you'd need to collect far more wood to bake the bread for each household than if one person batch bakes. Less of an issue during the winter when you need a great source anyway, but certainly not helpful during the summer when you probably don't.

Whilst there's problems with large bodies in trying to manage them, trying to be self sufficient isn't the solution to those issues.

 

[yorksrob]

You don't necessarily need to be self sufficient to achieve that. In most cases, it'd be enough to make sure that whatever basic supplies you need are sourced from enough different other countries that you could get by if any one single country (or single bloc) went rogue and suddenly stopped supplying you.

If every country tried to be completely self sufficient, that would basically be the end of international trade, we'd all become poorer (due to losing the efficiencies that come from countries specialising in what they are good at), and without trade interdependency, conflicts and wars would become easier to start - which could make them more frequent.

Why do you think a common market for coal and steel was created in Europe after World War 2? Precisely to force interdependence between countries to try and prevent war.

As I mentioned earlier:

Of course it's good for countries to have their fingers in eachothers pies to an extent for the sake of international concorde, however if too much of the flow is in the wrong direction, then that is a problem.

I don't think anyone wants a North Korea style hermit state.

Nevertheless, our current troubles illustrate the problem with being too dependant on imports for your basic needs. I'm still suspicious of foreign takeovers due to the Cadbury and P&O debacles.

 

[najaB]

Nevertheless, our current troubles illustrate the problem with being too dependant on imports for your basic needs.

While having a government that's intent on creating a hostile trading environment with our closet trading partners.

 

[yorksrob]

According to the Office for National Statistics foreign investors own £2,002bn worth of UK companies and UK companies own £1,769bn worth of companies overseas.

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These type of companies are valued at many billions - not many companies are big enough to take them over

That's a 233bn deficit. I'd want a hell of a lot of global peace and harmony for that investment.

 

[Broucek]

That's a 233bn deficit. I'd want a hell of a lot of global peace and harmony for that investment.

By historical standards, that’s exactly what we’ve had in the West for decades

 

[yorksrob]

By historical standards, that’s exactly what we’ve had in the West for decades

The rise of a belligerent Russia and Communist China suggests that this strategy is floundering.

 

[Broucek]

The rise of a belligerent Russia and Communist China suggests that this strategy is floundering.

Exactly

 

[johncrossley]

I don't think anyone wants a North Korea style hermit state.

Nevertheless, our current troubles illustrate the problem with being too dependant on imports for your basic needs. I'm still suspicious of foreign takeovers due to the Cadbury and P&O debacles.

You seemed obsessed by drawing boundaries. Apart from obviously local small companies, most medium sized or larger companies should not be labelled as a certain nationality. Yes, companies will be formally registered in various locations for the sake of administration but finances, staff, earnings and taxation will be spread fluidly across many countries or even most countries. There's no need to get so hung up on this issue.

 

[Peter Sarf]

The thing about money is not how much you get but the amount it moves around the economy being spent/earnt/spent. It is the FLOW of money that counts not just the existence of it.

Though we have come a long way from the days when money replaced barter I do wonder whether money has become a self fulfilling thing that is no longer our servant. A whole industry has grown up around this existence of what was once a way of trading in real things. I am not wanting to be too negative as the UK seems to be rather good at providing services in the artificial thing.

We have taken our eye of the ball regarding real things over the last few decades - even the Tories recently said we need to diversify into industry. So is it time to undo the headlong rush to do more instantly profitable things and get back to making things that people use and touch ?. At least a bit ?.

 

[coppercapped]

The thing about money is not how much you get but the amount it moves around the economy being spent/earnt/spent. It is the FLOW of money that counts not just the existence of it.

Though we have come a long way from the days when money replaced barter I do wonder whether money has become a self fulfilling thing that is no longer our servant. A whole industry has grown up around this existence of what was once a way of trading in real things. I am not wanting to be too negative as the UK seems to be rather good at providing services in the artificial thing.

As it happens much of the 'profit' made by Victorian Britain in the days of Empire from the Industrial Revolution to the end of the Edwardian Age was not made directly by manufacturing but from the fees levied by the shipping companies and insurers. As most of the world's steam ships were operated by British shipping lines they also benefitted by moving stuff from, say, Chile to, say, France or the USA - together with insuring the goods in transit.

We have a long record in financial services.

We have taken our eye of the ball regarding real things over the last few decades - even the Tories recently said we need to diversify into industry. So is it time to undo the headlong rush to do more instantly profitable things and get back to making things that people use and touch ?. At least a bit ?.

I agree, but the effect will not be huge but will help to diversify the industrial and commercial base and, it is to be hoped, spread it around the country.

But don't let the politicians decide on the products - that will certainly go wrong! The politicians' job is to ensure that the schools, colleges and universities produce people with skill sets in engineering, finance and marketing and also that there are enough 'Angels' with the wherewithal and knowledge to back promising ideas and start-ups.

It will take time.

 

[Peter Sarf]

As it happens much of the 'profit' made by Victorian Britain in the days of Empire from the Industrial Revolution to the end of the Edwardian Age was not made directly by manufacturing but from the fees levied by the shipping companies and insurers. As most of the world's steam ships were operated by British shipping lines they also benefitted by moving stuff from, say, Chile to, say, France or the USA - together with insuring the goods in transit.

We have a long record in financial services.

I agree, but the effect will not be huge but will help to diversify the industrial and commercial base and, it is to be hoped, spread it around the country.

But don't let the politicians decide on the products - that will certainly go wrong! The politicians' job is to ensure that the schools, colleges and universities produce people with skill sets in engineering, finance and marketing and also that there are enough 'Angels' with the wherewithal and knowledge to back promising ideas and start-ups.

It will take time.

My bold. Indeed it will take the time of many iterations of government. So long that most of the electorate will not be able to perceive which government or policy thereof caused what effects !. There is always the danger that people want instant results. Most people are not interested in much of what has been discussed on this thread. They are only interested in the more immediate things - like the weather and the cost of living. Some might not even have encountered the increased energy cost yet. I wonder if Putin's exercises in Ukraine bother the majority - until Russia is standing on the other side of the channel looking at us !.

Yes. I do hope the effort needed shows effect all around the UNITED Kingdom.

 

[DynamicSpirit]

Nevertheless, our current troubles illustrate the problem with being too dependant on imports for your basic needs.

If you're referring to the huge problems with Russia and energy supplies, surely what that illustrates is the problem with being too dependant on one single country (or one single bloc) for your basic needs - especially when that country has a known history of hostility to our values/making attacks on our territory/seeking to subvert democracy.

I'm still suspicious of foreign takeovers due to the Cadbury and P&O debacles.

Personally I'm somewhat suspicious of takeovers in general. I think there's too much risk of super-large organisations coming in and taking over a business that they don't really understand/don't have the right sympathies to run appropriately. I've seen a couple of examples of this in my own personal experience where takeovers have ended up basically destroying smaller, innovative, companies: The companies think they're getting a well needed cash injection to help grow, but what they're actually getting is, being managed by a bunch of investors/directors who have no knowledge of all the culture/existing customer base/etc. that has made that company a success, and also no loyalty to the existing workforce. The results, from what I've seen - are frequently disastrous.

But the nationality of the company doing the taking over has almost no bearing on that. So I would say it's a mistake to particularly single out foreign takeovers.

 

[Peter Sarf]

Also with take overs - was the company being taken over having problems anyway. Sometimes mergers are to try to make the result more competitive in a declining market or to strengthen against competition from elsewhere. Granted I do see some buyouts etc as a means of removing competition. For there to be a buyer there has to be a seller.

Of course the end result can lead to a monopoly and that is no good.

 

[Broucek]

Of course the end result can lead to a monopoly and that is no good.

Where very large companies merge, they usually need to get approval from competition authorities in multiple geographies to avoid monopoly issues. This is not necessarily forthcoming....

Aon, Willis halt $30 bln merger over monopoly concerns, delay

Aon Plc (AON.N) and Willis Towers Watson Plc on Monday called off a $30 billion merger that would have created the world's largest insurance broker, saying U.S. regulators' objections created unacceptable delay and uncertainty.

www.reuters.com

 

[philosopher]

One problem in the UK I think is that many entrepreneurs in the UK seem to set up their businesses with the explicit intention of selling up once their business is worth enough that they can live off the proceeds of their sale. As a result, you get many start ups in the UK, but few transition into being large companies that generate large numbers of jobs and income for the UK economy. If they do end up growing into large companies under their new owners, the profits end up getting exported overseas. This seems to be a particular issue in the tech sector.

The problem is, I am not sure how the government tackles this issue. Changing tax laws to discourage entrepreneurs from selling up would probably mean they never set up the business in the first place.

 

[Peter Sarf]

One problem in the UK I think is that many entrepreneurs in the UK seem to set up their businesses with the explicit intention of selling up once their business is worth enough that they can live off the proceeds of their sale. As a result, you get many start ups in the UK, but few transition into being large companies that generate large numbers of jobs and income for the UK economy. If they do end up growing into large companies under their new owners, the profits end up getting exported overseas. This seems to be a particular issue in the tech sector.

The problem is, I am not sure how the government tackles this issue. Changing tax laws to discourage entrepreneurs from selling up would probably mean they never set up the business in the first place.

I have wondered about this before. Does a start up get to a size where it is hard to get funding - deemed as too risky sort of not big enough but also too big. Or is it that the entrepreneur has no experience/ability/ time to run this growing firm so sells out (and probably starts another firm). Or is it that a competitor wants to nip it in the bud and so makes a far too tempting offer.

 

[coppercapped]

My bold. Indeed it will take the time of many iterations of government. So long that most of the electorate will not be able to perceive which government or policy thereof caused what effects !. There is always the danger that people want instant results. Most people are not interested in much of what has been discussed on this thread. They are only interested in the more immediate things - like the weather and the cost of living. Some might not even have encountered the increased energy cost yet. I wonder if Putin's exercises in Ukraine bother the majority - until Russia is standing on the other side of the channel looking at us !.

Yes. I do hope the effort needed shows effect all around the UNITED Kingdom.

I couldn't agree more!

Added in edit:
Comments to Post #418 and #419 above.

This issue of UK start-up companies not growing to become world sized, like Siemens, Microsoft and the like is also something that concerns me.

I think that the reasons are in part cultural - one makes one's pile and retires to the country. Horizons are self-limited, I can't remember any UK entrepreneur saying, like Steve Jobs of Apple, that he/she wants 'to change the world, one person at a time'. In part this desire to sell up is due to the tax regime - which reflects the priorities of the public - making it difficult to become filthy rich. In the USA there is much less public opposition to becoming rich by your own endeavours - it is in fact the American Dream. It is no accident that the USA has in the last 50 years produced such companies as Microsoft, Intel, Qualcomm, Cisco, Apple, Dell, Amazon, Facebook for example. There are others.

Start-ups require a particular kind of person - one who is very focussed, knows exactly what they want and is not prepared to take 'No' for an answer. They will kick doors down...

This skill set is not one that transfers easily to 'management' - sorting out the boring day-to-day issues with suppliers, staff, the local council, the tax man. These are not things the starter-upper does well. This 'in-between' phase is where venture capitalists help - in the supply of skills, knowledge and advice to growing companies. I am not sure that the UK has enough of the right type of venture capitalists to support growing companies in making this transition as, in the USA at least, venture capitalists are frequently those who have successfully made it big time so have the intimate knowledge of the process and the pit-falls.

The long term trick is to make it socially, economically and fiscally attractive for companies to continue to try to grow without running into a virtual wall. It is not even necessary for the originator to stay with the company, just that the general environment is supportive of growth.