CBI chief Danker calls for 1945-style vision
Tony Danker: ‘we need a vision’ he told the Bloomberg event
Britain must plan a vision for the next decade that is based more on the reconstruction set out in 1945 than the financial crash of 2008, according to the CBI’s new leader.
In his first key speech since becoming director general, Tony Danker called for a national economic vision and strategy designed around the “triple shocks” of Brexit, COVID-19 and climate change .
Together they highlight the need for business and government to design an economic strategy for the next ten years, he told a virtual audience of business, political and civil society leaders, organised by Bloomberg.
“It may seem that to talk now of the decade ahead is misplaced. But I think it’s what the crisis demands.
“Build Back Better is easy to say but it is much harder to do. It needs a vision, a plan and a consensus as a nation to pursue it.
“I don’t think we did that after 2008.”
He added: “We stabilised the economic system immediately. Then for the long run, we stabilised the public finances. And we achieved modest economic growth.
“But our productivity growth flatlined. And our society divided rather than united.
“So, what will we take from this crisis? Where, in our darkest times, have we made real shifts for the better?
“Most notably – of course – in the aftermath of the Second World War, when post-war reconstruction gave birth to the NHS and the creation of the welfare state.
“Let’s be clear. The scale of the shocks we’re facing today – Brexit, Covid, and the Climate imperative – demand a similarly dramatic moment of unity and foresight.”
He argued that the UK can use the Brexit deal, as a “jumping off point — to put the politics behind us, grasp the opportunities ahead, and win more business in critical areas.”
He added that the Covid pandemic, which has led to the sharpest contraction in annual GDP since the early 1700s, has brought about a positive response from businesses – “a decade’s worth of innovation and digital acceleration achieved in a year.
“And firms moving essential medical supplies, building ventilators at record speed, keeping food on shelves.
“And, of course, the vaccine – borne of a superb alliance between companies, government and academia. The ultimate proof of what such alliances can achieve.”
On climate change he said the UK has now reached a tipping point based on the renewed commitment to net-zero targets, “requiring a totally different metabolic rate of economic planning, collaboration, and dynamism”.
But at current estimates from the Climate Change Committee, UK low carbon investment each year will need to increase from around £10bn in 2020 to around £50bn by 2030, he argued.
“Each shock alone is enough to force fresh thinking. Taken together, they make 2021 as pivotal a year as any we can remember,” he said, adding that there are grounds for optimism.
“I am a total believer. A complete optimist. I share the Prime Minister’s enthusiasm for what lies ahead.
“I believe we must, and we will, come together to forge a better decade. More 1945 than 2008.”
However, he pointed to underlying problems, including regional inequality, persistently low levels of business investment, still no clear pathway on skills, and weak productivity growth – the “semi-secret sauce” of a nation’s economic success.
“Productivity in London is almost one third (32%) higher than the UK average, and over 50% higher than in Yorkshire & Humber – hitting living standards and wages.
Business investment and productivity has been low
“And while the Government’s levelling up approach has focused on public sector investment, here is little yet in place to tackle the business sector competitiveness of our regions.
“On business investment, for the last four decades, we have deteriorated from a peak of 14.7% of GDP in 1989 to a low of 8.9% in Q3 2020, putting us firmly at the bottom of the G7.
“And where we do enjoy successful investment in R&D and innovation, we fail to drive successful adoption among the rest of our economy.
“My three years at Be the Business gave me a front row seat on this phenomenon. “Travelling all around the country I started to see the truth in Andy Haldane’s conclusion – that the diffusion engine of the UK economy has stalled.
“Skills we know is a mixed picture. CBI data suggests that 9 out of 10 people in the current workforce will need to upskill or retrain by 2030 – in part to address an existing – and growing – shortfall in technology skills.”
Mr Danker argued that the UK’s greatest recurring weaknesses” is our inability since 1945 to unite around a shared vision and economic plan of where we want to be.
“For decades, we’ve oscillated between the view that either government should run the economy, or that government should just stay out of it.
“And then as industrial strategies have become more popular – they were each forged by politicians and officials with businesses added in later.
“We have been short term – both sides – and failed to unite around a shared plan to realise our potential.”