Guest article by Michael Moore, Director-General, British Private Equity and Venture Capital Association (BVCA)
To paraphrase one of the United Kingdom’s former Prime Ministers, there are three things that matter to businesses wherever you travel in the world: competitiveness, competitiveness and competitiveness.
Unpacking the different layers of that mantra, there are three essentials at stake: is the country’s business environment competitive, in particular to attract and sustain mobile global investment of whatever kind? Is the business sector competitive, with appropriate incentives and a proportionate regulatory regime? And is the business itself competitive, given the demands and opportunities in its market?
Private equity and venture capital in the UK have routinely been able to respond in the affirmative to each of these questions and as a result have grown significantly in recent years. As a positive consequence for the UK economy, billions of pounds of investment have been made and hundreds of thousands of jobs have been created and sustained. As such, we are a great British success story and proud of it.
In the heart of London, as with other globally significant cities, much of the broader economic success might be taken for granted by the casual observer. The City, and the wider UK economy, have been internationally competitive for centuries, the finance sector has thrived within it, and many globally significant businesses count it as ‘home’. The ‘competitiveness trinity’ is secure, it appears.
And yet, closer study quickly reveals that the persistent success of London and the UK has co-existed with creative and destructive tensions throughout its existence. Battles with politicians and regulators on the one hand and market developments on the other have never been far from the surface. And when we have experienced deep trauma, such as the financial crisis, it is all there in sharp focus right in front of us.
There has been a decade of convulsion as a consequence of the financial crisis, the effects of which still impact communities and businesses across the country. Add in to that the impact of mega-trends such as the tech revolution and the energy transition, and the recent political fallout in terms of Brexit is plainer to understand (quite apart from the fundamentals of the arguments about EU membership).
Whether or not we are on the cusp of a Halloween departure from the EU, or may yet see a further extension to the negotiations, the competitiveness debate looms large. We may speak confidently of the ‘competitiveness trinity’ – but for how long?