Posts Tagged ‘Economics’

The ‘Wimbledonisation’ of Britain

February 2, 2009

Robert Peston, the BBC’s Business Editor, has written a thoughtful piece on his blog about Britain’s economy and the wildcat strikes currently taking place.

As [Sir John] Rose [CEO, Rolls-Royce] said, it is human nature for a business with operations all over the world to favour its home country when making decisions about where to expand – or, as in the current horrible economic climate, where to cut.

So it should be no surprise that an Italian company IREM, hired by Total of France on a construction project in Lincolnshire, should itself be employing Italian workers. In a way it would have been more surprising, at a time when money is tight all over the world, if IREM had shunned its own people and had hired new British workers.

In the current economic climate I believe that governments should be extremely careful about their policies, it will be a very sad day when governments from the world’s leading countries start enacting protectionist policies into law. It is a retrograde step, and one which will impact on every economy, especially those in developing countries.

America, despite their constant talk of free trade, has always had protectionist policies (see Protectionism), as do many countries in Europe. One exception seems to be the UK, which is probably the most open to free movement of investment and jobs. Protectionism within a struggling global economy is a sure fire way to speed the process up and end up with a deeper and longer-lasting recession as Peston argues.

History does indeed tell us that protectionism in a worldwide downturn is the shortest route to slump and depression.

So, is the UK’s economy better off for being open and free and allowing foreign companies to buy up its major businesses? I would argue that on the whole it has been better off, in the good times at least, but personally I would prefer the country to have greater control over infrastructure businesses (energy, water, transport etc.) this is because if there is a truly global and major crisis it would be reassuring to know that the businesses running our infrastructure will have the UK’s interests at heart. On the jobs front, should businesses operating in the UK be forced to employ only or mostly British workers? Of course not, if a business believes that it can employ workers from outside the UK to do a better job and cheaper then I see nothing wrong with that, if anything complain about the government’s immigration policies the businesses are only maximising their shareholder value.

But Wimbledonisation – the notion that Britain is the winner even if none of the economic players are actually British – became official dogma.

We can carry on with a Wimbledonised economy, but I would like to see British companies improving their competitiveness on the world stage and expanding into other markets, only then will the free market economy which the UK operates be completely beneficial to the UK populace.