Scott Reid: Service sector can bridge trade gap
Unemployment has fallen at a rate that has taken even the most optimistic of optimists by surprise. And the consumer keeps on spending, as was exemplified last week with news of bumper car sales in July – traditionally a quiet month for showroom sales folk ahead of the September plate change.
We should receive confirmation later this week that the UK economy grew by 0.8 per cent during the second quarter. This second reading of GDP will provide further evidence that output has finally surpassed its pre-recession peak.
Yet some pretty significant headwinds remain. Companies continue to air their frustrations over the lack of bank support. Lenders have become increasingly risk-averse as they focus on propping up their own battered balance sheets.
While it’s encouraging to see that more businesses are taking on extra staff, as we reveal today with our report on the latest recruitment survey from Robert Half, too many are still struggling to maintain their current headcounts.
Exporters, meanwhile, face the challenge of a soaring pound. Since the start of the year, sterling has gained about 13 per cent against the dollar and 10 per cent versus the euro. It’s a double whammy for businesses whose goods and services become less competitive overseas, and also see their foreign earnings dented when converted back to sterling for reporting purposes. Johnnie Walker maker Diageo is just one of a raft of blue-chips to have revealed a currency-related blow to its bottom line in recent days.
The UK government is keen to see the economy swing away from its over-reliance on domestic consumption to focus on building export trade. That rebalancing exercise is proving tricky though. Britain’s trade gap unexpectedly widened in June to fuel concerns about the impact that the soar-away pound is having on the price of our wares abroad.
Interestingly, the British Chambers of Commerce (BCC) believes that the vast services sector, which has been underpinning the economy through good and bad times, could hold the key to unleashing the nation’s export potential.
It reckons that one in five service firms is on the verge of exporting, and is calling on action to convert this potential into reality.
The lobby group is looking to encourage more service sector businesses to cast an eye beyond traditional markets for export opportunities. Africa, for example, has been identified by the International Monetary Fund as having one of the largest GDP growth prospects, with an increased demand for services in countries such as Nigeria.
BCC director-general John Longworth talks of a “culture change” in the UK when it comes to international trade and appeals for more investment, stronger language skills and a “global mindset instilled in people from a much younger age”.
It’s some blue-sky thinking that politicians would do well to embrace. The services sector is some six times the size of manufacturing, though global tensions such as the current tit-for-tat trade war with Russia prove that it’s not all plain sailing for potential exporters.
Robots predicted to terminate our job prospects
THERE’S no escaping the rise of the machines. Recent years have seen an explosion in the number of self-service tills in supermarkets and other retailers such as B&Q, Boots and WH Smith.
Love them or loathe them, these ranks of robotic checkouts and their familiar cry of “Unexpected item in bagging area” look set to stay. Indeed, their numbers are predicted to swell.
Those frustrated by this onslaught will have had their worst fears realised last week thanks to a report by think-tank the Pew Research Centre. It offers up a not-so-distant future where robots have supplanted white-collar workers including doctors, accountants, lawyers and even journalists.
Quizzed on whether they thought automated artificial intelligence would displace more jobs than they create by 2025, technology experts – whose futures are presumably just as threatened – were evenly divided. Most agreed, though, that the machines would take over many human jobs within the next decade.
If this all sounds just a tad Orwellian, remember those black and white visions of a future world from the 1950s. A couple of generations on and much of the technology touted has become commonplace. Except, perhaps, for the proliferation of robots. And that’s now on its way.
The experts believe that professions requiring compassion, such as nursing and teaching, would be likeliest to still be done by people, and there is a utopian view that machines can eliminate the drudgery of work and allow us all more free time.
It’s easy to see why the company bean counters are so enthusiastic about rolling out the robots. People, with their holidays, sickies and comfort breaks, remain the single biggest cost to many businesses.
Best make the most of that human interaction while it lasts. «