Dual Disruptions: Brexit and Technology

摘要

the uk faces two significant economic challenges in the years ahead: Brexit, and digital disruption. They are likely to reinforce each other. Although there are largely separate public debates about each, businesses, policymakers and citizens will have to deal with both at the same time. To make matters worse, they are going to interact in challenging ways. It is not obvious that the British state has the capacity to develop a strategic approach to managing the economy in order to respond to the disruptions ahead, although there are signs of a dawning recognition that the existing model will not serve in the context of significant structural economic change and diminished access to the European market. The economic consequences of Brexit have been hotly debated, but the heat generated by the media and political debate does not reflect the overwhelming balance of opinion among economists that these consequences will be negative. For the forty-five years since the UK first joined the EEC, the trading links between this country and the growing number of other member states have increased in number and in scope. Adam Smith's original insight that mutual gains would come from specialisation and exchange applies across borders as well as within them. The Single Market, signed into being in 1986, accelerated the growth of this network of economic links between the UK and our nearest neighbours. Brexit does not mean ‘leaving’ as in leaving a club one no longer wants to belong to; it means breaching commercial (and human) relationships dating back decades. It is not possible to ‘leave’ history without damage. So, Brexit is without question going to disrupt the economy. Meanwhile, continuing technological change promises to be another source of economic disruption. In one way, a big dose of new technology is exactly what the economy needs, given the Brexit headwinds. The widespread adoption of innovations to use the available resources more effectively in producing better goods and services is precisely the mechanism driving higher living standards, the quality of life, health and longevity over time. Britain's longstanding poor productivity performance compared to other major economies has many contributing factors, but low business investment in new capital equipment—automation, in other words—is one of them. For example, the 2017 annual report from the International Federation of Robotics showed the UK to have been lagging well behind the other large European countries in the number of multi-purpose industrial robots purchased. The UK has the lowest business investment as a proportion of GDP of all the G7 nations. Low quality management in many British firms is part of the story too, Britain having a fewer high productivity firms and a longer ‘tail’ of low productivity firms than comparable economies.1 Given this lacklustre record, it is hard to believe that some of the more sensational predictions of job losses due to automation will be realised. Yet even 10 per cent of existing jobs falling to ‘robots’ in sectors ranging from law to retail to manufacturing poses a substantial policy challenge. It is a challenge that Britain has failed to address in the previous waves of creative destruction, due to technology, the deindustrialisation of the 1980s and 1990s, when manufacturing was substantially automated. High unemployment, low skills, ill health and the whole cluster of markers of poverty and powerlessness scar the former manufacturing heartlands. Indeed, we are still living with the consequences in many ways, not least in the geography of the Brexit vote itself.2 This is not to say we should hope to halt the wave of digital disruption. The official productivity figures may not show it, but access to new technologies has brought consumers amazing services at low cost. We can easily access information, education, entertainment from almost anywhere at low cost. People place great value on the world that digital technology has opened