While Spain distracts domestic disquiet by drumming up foreign frictions this week over Britain’s last colony, Gibraltar, and tears a leaf out of an unpopular former British premier’s survival guide, we can sit back and see why Britain is in a better position than Spain or Cyprus to bounce back when the US economic recovery gets under way.
Official figures from the UK’s Office for Budget Responsibility were this week analysed by Labour Party analysts hoping to scorn the drop in British living standards.
Certainly, they showed that since David Cameron’s government came to power in May 2010, UK average hourly pay has dropped by 5.5%, adjusted for inflation, while for the EU as a whole it has dipped by 0.7%.
The drop in wages in crisis hotspots Spain and Cyprus was 3.3%, while Germany’s 2.7% rise since 2010 helped to explain why the average hardly moved.
Putting some meat on the bone, the Institute for Fiscal Studies showed that British public servants earned GBP15.80 an hour in 2011 versus GBP16.60 in 2009 while private sector workers on average received GBP13.60 versus GBP15.10 two years earlier.
At first glance that looks alarming. Public servants paid more than private sector? But when you consider that public servants put in shorter hours than in the private sector, their pay is about the same.
So UK PLC – all looks good for a recovery. Or does it? While salaries are moderating in the UK and could help our competitive position, other data suggests Britain could be about to lose out where innovation matters.
This week the World Academic Summit Innovation Index found that big business is shunning Britain for research and development and opting to hand the money to Singapore, South Korea, Taiwan, China and India.
Global companies are investing just GBP8,600 per British academic, putting Britain 26 out of 30 countries surveyed. South Korea is the top winner, bagging GBP65,000 for each academic that carries out work for big enterprises.
Even within Europe, Britain is an outcast. Belgium, Sweden, Denmark, France and Germany all rank above the UK, according to the Times Higher Education report. Ireland fares worst, in position 30 out of 30 on GBP5,350.
Globally, Asia is the winner because of the focus in the region on technology and computer science. Britain, on the other hand, is at risk of not having as much influence. Difficult for a nation famous for innovation in the Victorian era.
Ok, back to Spain. Since defending the Falklands from Spain’s ally Argentina in 1982 helped then British premier Margaret Thatcher win a landslide election victory the following year, one can only assume that the Spanish Prime Minister Rajoy is thinking the same way. Maybe all he will do is secure David Cameron’s premiership instead.