Vanity sizing the economy and Britain’s lost talent

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A couple of stories caught my eye last week that could have implications on Britain’s economic growth. No prizes for guessing the first one: those headlines that screamed how the UK economy is 5 percent bigger than thought. 

Alas, it is just statistics, damn statistics. As I understand it, “facts” as we know them, are about to change, to make us feel better about the cash in our pockets and essentially look better on paper.

The ONS (Office for National Statistics) says once they have tweaked various measurements of economic performance, to be more in tune with the way they make calculations on the international stage, huge changes to Britain’s economy emerge. The tweaks are in areas like business investment and pensions savings. Research and Development will be counted as capital investment. It all adds up to an extra £25bn of nominal GDP each year. That will boost the size of the economy by between 2.5 and 5 percent. That is huge.

Hold on though – nothing real will have changed, although officially, we will all be richer! Apparently if makes international comparisons fairer, but I do hope we don’t get complacent. Shuffling around the numbers only seems to gloss over the extent of the pensions and long-term savings crisis. The changes to how we measure the economy are a big deal, to how we analyse, talk about and live in the UK economy.

So I am slightly confused as to why the ONS didn’t make a bigger song and dance about it, directing us via Twitter to a slideshow on a weblink here: https://storify.com/ONS/onseconomy , rather than posting on the front-page of their website. Think about it. Isn’t it weird to think that everything we thought we knew and understood about the UK economy will actually mean nothing after all?

Immigration targets are costing students and economic growth

Another concern is the news that the number of overseas students at UK universities has fallen for first time in 30 years. Last May, Business Secretary Vince Cable warned that the public debate about immigration was in danger of damaging the “economically valuable” recruitment of overseas students to the UK. He said overseas students had become caught up in the “public panic” over migrant numbers. Now Karn Bilmoria CBE, founder and chairman of Cobra Beer and founding chairman of the Uk-India Business Council wrote a column about it in Cityam. He says this is little less than a national scandal. I agree. 

The Centre for Entrepreneurs notes that migrants are responsible for founding as many as one in seven UK businesses. In terms of growth and development, that is not to be sniffed at. Also consider that foreign students contributions helps English universities generate more than £10bn in export earnings, according to the business department of the Higher Education Funding Council. With a skills shortage in the UK too, we shouldn’t be closing doors to world’s brightest and best talent.

What could be putting students off? It doesn’t help that the government seems to blame business for everything. I’m thinking of that maiden speech a couple of weeks ago from Immigration Minister James Brokenshire to Demos think tank. He hit out at immigration benefitting the “wealthy metropolitan elite who wanted cheap tradesmen and services” at the expense of “ordinary, hard-working people”. Business groups slammed the speech as “feeble and pathetic”.

Last year there were those “go home or face arrest” vans. Then there was the quickly shelved idea to impose a £3k security bond on short-term visitors from “high risk” countries like India, Pakistan and Nigeria – a deposit they’d only get back on departure.

Meanwhile other countries are wooing bright minds from overseas. Canada is on an aggressive recruitment drive for international students and the French government is simplifying the visa application process with a view to doubling the number of Indian students at France’s universities.

The government may want to reduce immigration, but is inadvertently convincing some of the world’s talented young minds that Britain is not open to their business.