UK Economy - Strategic Challenges
The UK Government Treasury Department has highlighted the following 4 areas of challenge and opportunity for he UK economy:
1. Global uncertainty
Global uncertainty and higher risk of economic instability due to the increased worldwide interdependences.
2. Globalisation and technological change
Globalisation and technological change which are forecast to be problematic in the short term for the UK due to both being enablers of economic shock transmission from other economies, as seen in the recent credit crunch. Longer term, the government sees these as advantages to the UK as the emerging markets create strong opportunities for UK business. These new markets are seen as augmenting rather than replacing the traditional markets of the US and Europe. The Office of Science and Innovation (OSI)11 has highlighted eight broad areas of technological change:
- information handling & knowledge management – tools to store, process, collect, interpret, and transmit data;
- sensors and tracking – tools to enhance our knowledge of the physical world through effective monitoring of the environment, goods etc;
- network interactions – virtual and physical processes through networks;
- security – monitoring, tracking and detection tools plus understanding and identification of complex behavioural patterns to prevent, protect and profile security risks;
- advanced materials and robotics – production, distribution and logistics, use, disposal and recycling of new materials. Developments in processing, manufacturing, including robotics;
- nanotechnologies – production and use of nanoscale materials and devices. Associated developments in processing and manufacturing;
- body and mind sciences – tools to understand, repair, and enhance physical, mental, and behavioural capabilities; and
- energy – technologies to meet society’s energy and environmental needs.
The report also highlights the needs and benefits of embracing innovation and the importance of the knowledge-driven sectors of the economy. Constant innovation on how business is organised and conducted as well as in technological development will be needed.
3. Environmental Change
Environmental change will have a significant impact on global and UK economies. While direct impacts on the UK environment are not expected to significant until post 2020, the impacts to other territories could affect commodity prices and introduce regional instabilities.
4. Demographic Change
The proportion of UK citizens over the age of 65 is forecast to rise by 6% by 2030 when compared to the ration in 2006, coupled with an increase in UK population to 70 million, this implies a ration of 1:1.26 for those in work and those not. Hence there will be a need for greater productivity per head in the workforce by that time. However the mobility of the workforce from other countries under the UK open economy strategy is expected to provide some benefits in this area.
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