Senior RBS advisor gives Yorkshire businesses key economic insights

YORKSHIRE businesses heard Hamish Smith, senior economic advisor to the Royal Bank of Scotland, reflect on some of the key issues affecting the economy at a recent event.

Whilst the rebalancing of the UK economy is progressing on the jobs front, it will take much longer on the financial side, Smith warned.

He highlighted the key reasons for this as the high levels of both household debt and Government debt. With this looking unlikely to improve markedly in the near future, he said, there is “clearly a need” to focus on business to business commerce and export.

The government has an economic plan to re-balance the economy through trade and exports, but Smith pointed out that the success of this plan will, to a certain extent, be dependent on the export markets themselves.

He said: “Historically the Eurozone has been key to UK export, but there is an argument that we need to widen our export base by targeting emerging markets. The more markets we trade with, the less we may be affected by a downturn in one of them.”

Smith observed that whilst many people are aware of the problems experienced in the Eurozone in 2012, there was also a slow down in the growth of world trade last year. However, world trade growth looks set to improve over the next few years, and this should have a positive impact on exporters.

Smith reminded people not to lose sight of the big picture.

He said: “The UK economy itself has been and remains a very good place to do business. We have the eighth most competitive economy, world class education, a skilled workforce and the sixth largest manufacturing base in the world; but we are not without weakness, and there are areas in which we can improve.”

Areas where longer term opportunities presented themselves which could help benefit UK economic growth included a robust and stable infrastructure policy to ensure the necessary long term investment in energy production.

“While the UK has world class universities, continued investment was particularly important in early education to enable young people to develop to their full potential and help support a productive and innovative economy. Increasing research & development (R&D) by UK businesses is also a critical factor in boosting productivity and therefore growth,” he said.

Smith concluded by saying whilst there have been recent signs of life in the UK economy, we must nurture the areas that will lead to growth.

“In this regard businesses are fundamental to our success,” he said.

The event was hosted by chartered accountants Barber Harrison & Platt, BRM Solicitors and NatWest.