The way the UK monitors and measures its economic performance may have to change as it confronts the challenges of the future, according to a senior economist.
Frances Haque, the Chief Economist at Santander UK, says traditional analyses of national output may no longer be providing an adequate insight into the reality of economic performance at a time of technological, business and social change.
She spoke out after delivering a Business Leaders Lecture at Nottingham Business School, part of a programme of events intended to mark the 40th anniversary of an institution renowned for its innovative approach to business education.
In front of an audience of students, academics and business people, she said: “When we look at the economy, monitoring GDP growth has always been seen as the most familiar measure of the big picture performance of the UK economy. It remains a helpful comparison.
“But a single metric is not telling us everything we need to know. If we look at unemployment, for example, it tells us that the number has been falling. What it doesn’t tell us is the quality of the jobs people are going into and what that might translate into in terms of wage growth, and how that impacts on issues like inequality.
“We need to develop an understanding of those relationships. A richer picture of the UK’s economy would not only help institutions like banks as they make lending decisions, but it could also help inform government industrial and skills policy.”
Frances said the debate about skills policy would be particularly important at a time when transformational technological change continues to impact on the jobs and careers people will have now and in the future.
“Skills policy is a matter not just for government and businesses but for universities too,” she said. “Meaningful research carried out in association with businesses is extremely important, but so is the kind of personalised and experiential learning that has been pioneered at Nottingham Business School.
“We need to see more of that across the UK. If we look at Germany, for example, students go out into businesses and do practical work on top of their university learning. This is one of the reasons why they don’t have the skills gap that we do here.
“Experiential learning enables students to join the dots between theory and practice more effectively. Having that understanding earlier on and moving fluidly between the learning and business environment encourages understanding, flexibility and the broader skillsets that will be key to the UK economy as it continues to evolve.”
Her lecture also covered the outlook for the UK economy, which she says has been impacted by national and global uncertainties.
She commented: “National and global uncertainty means that the UK economy is not firing on all cylinders right now. That has translated into a lack of business investment, particularly in sectors like manufacturing
“Until there is some certainty around Brexit it is difficult to see that changing, and we could see the economy slow further if this uncertainty drags on. If that happens, the Bank of England’s Monetary Policy Committee may well have to intervene with policy support which encourages investment.”
She added: “In the longer-term, the UK has to confront two challenges – continuing low productivity compared to some of its international rivals, and that skills gap. Investment in the UK’s physical and digital infrastructure may help to improve our productivity performance but as we have seen the skills gap is a more complex issue.
“Whilst we face some big risks to economic performance, some of these problems may also translate into significant business opportunities as we confront both climate change and the transition into the fourth industrial revolution brought on by technology.
“Building a richer picture of an economy which is changing dynamically will be vital if we are to understand these challenges, prepare for them, and identify the best way to exploit the opportunities.”
Santander UK has a long-term partnership with Nottingham Trent University (NTU) through its Santander Universities initiative. Over the past seven years, the relationship with NTU has provided support for hundreds of students and a number of SME businesses in the East Midlands. This year, the University was named by Santander as its national Digital Technology Solutions degree apprenticeships provider.
Frances Haque’s lecture was delivered as part of the Business Leaders Lecture series, which gives students, academics and stakeholder insights from senior figures in the business and organisational world.
Melanie Currie, Deputy Dean of Nottingham Business School, added: “Our 40th anniversary is an opportunity to both celebrate the School’s long-term contribution to business education and also look forwards at a time of transformational change in the world around us.
“As Frances’ lecture demonstrates, that transformation is asking some searching questions of the UK economy and the skills it needs now and in the future. It is vital that universities and schools like ours respond in an agile manner, and our emphasis on experiential learning reflects our belief that business education delivers the best outcomes when it combines theory and practice.”