Is London losing its relevance?
With cities catching up, how can London keep ahead in the race?
Let’s be honest; London has got it pretty good.
We have a rich culture and historical significance which puts us on the tourist trail for travellers, in history books around the world and generates a level of international respect.
We have political stability (Boris Johnson’s uber floppy, blonde mop aside). We have the City of London, with its prowess and swathe of international HQs.
We all speak English, mostly very well, and we have good old GMT, which allows us to trade internationally with ease, “Good night Hong Kong, good morning New York.”
These key factors have put London and the UK in a strong, economic position internationally for decades. But is it still enough? Can we truly rest on our laurels, ride out the current economic storm and expect to come out of the other side, as internationally significant as we went in?
“These factors have held significance for many years and we have a lot to be proud of,” says Yvonne Smyth, Director at Hays, the leading recruiting expert.
“But all of these things only carry a certain amount of weight; a lot of it is historical. London needs to redraw the reasons why it is relevant today rather than relying on old arguments.”
Research has shown that this is a good point. Ernst & Young found in its 2012 UK attractiveness survey, that while the UK is still the most popular choice for inward investment in Europe, it will be taken over by Germany in two years unless action is taken.
The report looks at attitudes of global investors and showed that the UK had suffered a 7% decline in overall projects (financial services dropped by 15%). Germany’s overall share however rose by 15%.
“The UK benefits from “soft” attributes such as the fact that it is a nice place to live, and is stable whereas companies choose Germany for its infrastructure, logistics and technology,” Mark Gregory, Chief Economist at Ernst & Young tells me.
“The UK attracts much more US investment, whereas Germany benefits more from the rest of Europe and increasingly China. The UK needs to start responding to some of Germany’s advantages and invest more to reduce Germany’s lead but also to go after new markets maybe Latin America as a source of new investment.”
One area which seems to draw attention is that of talent and skills in the UK and London. “So far the UK’s attractive attributes are enough to keep ahead of the game but the UK does need to improve infrastructure, skills and its targeting,” adds Gregory.
Hays, the leading recruiting expert, carried out its Global Skills Index late last year. The index is a model which allows us to assess the factors that contribute to skills shortages in various countries. Talent mismatch is one of the factors taken into account. This is the disparity between skills needed by the businesses and the skills possessed by the workforce.
The UK unfortunately has a score of 9, showing a high level of mismatch.
“It is a comprehensive report which puts forward a three-point plan which we believe the government, employers and educational bodies need to start actioning to deal with the disparity and mismatch in the supply and demand of skills globally and mirrors much of what we are also seeing in the UK,” says Smyth.
The plan is as follows:
- Governments must have clarity on the skills that are required and look to attract those specific skills.
- Employers should be offered fiscal incentives to increase training provision
- Governments to work with employers to draw up strategic plans to increase the provision of education in shortage skills
Languages are a major barrier for the UK workforce. Without the language skills, the UK will struggle to export its talent, creating higher unemployment figures. We have many highly skilled graduates coming out of our universities but international language skills are not high.
“When people learn English in other countries they’re opening up to the world, to another perspective, and that’s what Britain losing out on,” says Katharina Schaden of Rosetta Stone.
“Sixty eight per cent of British people speak no other language to any proficiency. Meanwhile, in China, over 250 million people are learning English. English at the same time is no longer a lingua franca. Research from the National Centre for Languages found only 6-8% of the world’s population speaks English as a first language, and 12% as a second. And when it comes to doing business in an interconnected and globalised world, foreign language skills are increasingly critical.”
It’s not just language skills we need to pull our socks up about. Despite pockets of impressive work in the field of science, such as the discovery of graphene at The University of Manchester, we could be doing more to encourage students to take up STEM disciplines.
“Think tank Centre for London has identified skills gaps as one of the main areas of concern for Tech City entrepreneurs,” says Adfonic CEO, Victor Malachard.
“There is clearly a shortage of STEM-skilled workers in the UK; not enough is being done to foster home-grown talent, while the red tape surrounding employer-sponsored work visas for international employees can make recruiting the top 1% of global talent - who help to drive the fast-paced growth associated with tech start-ups – challenging.”
It is clear that action is required to make sure we are fostering enough home grown talent to attract business from around the globe. But is it enough to produce our own skilled workforce?
“Whilst we are taking positive steps to develop sufficient talent of our own, it is worth noting that if we are to remain competitive, there is a clear gain in opening the country up for business and welcoming overseas skilled talent,” says Smyth.
“Employers need to be confident that they can move their workforce around with ease. World class businesses need to have access to world class talent. If we don’t help these people to bring these skills in, then our doors are closed and that is a problem.”