It is bad news that the Government of India (GoI) looks set to buy its new generation combat aircraft from Dassault Aviation of France and not EADS, which makes the Typhoon (mainly in the UK and Germany).
This was some prize, which positions the winning firm and its government as a strategic partner for India while it establishes itself as a regional super-power, complete with a blue water navy and new hi-tech equipment for its large army. I wrote about the challenges facing David Cameron on ConservativeHome back in 2010.
When the Prime Minister led a huge entourage to India in July 2010, and talked about a special relationship, this was one of the deals he had his eye on. Since then he has lobbied Indian Prime Minister Manmohan Singh at every available opportunity. So has Chancellor Merkel. The EADS campaign in Delhi was led by the Germans and it looks like they botched it – most industry experts agree that Typhoon as the better aircraft. Dassault’s Rafale has never previously been sold outside France. Then again, the French have a record of bidding successfully for big GoI procurement contracts; the French Government is by all accounts good at pulling out all the stops – if that’s the right expression. And Sarkozy has an election to win.
But getting Britain across the finishing line first in these highly complex and politicised export deals is exactly what the Coalition Government pledged to start doing as it re-orientated the UK economy towards exports. Is this happening? I’m not sure. Strip out the Tata effect and I fear our trade with India, for example, remains beta, though to be fair, India’s economy remains closed to many sectors like insurance, legal services and retail where the UK has competitive advantages.
The good news is that we remain so good at these services; industries like banking and the law are well-suited to an advanced industrial economy which has a world-beating educational infrastructure and cannot compete with India and China on wage costs. Bring on George Osborne’s ‘march of the makers’ but don’t devalue what is already world class.
We want balance, and we want it as soon as possible. We need to create an environment in which entrepreneurs and investors feel confident they can grow hi-tech, design-rich manufacturing businesses across the UK; we need to be able to offer school-leavers, especially outside the South East, a range of local career opportunities that is not concentrated on out-of-town retail and local government.
We can do this, and the journey could be uplifting as we re-connect with the trade winds and salt water which still sloshes about in Britain’s DNA, but it will take tremendous effort from all of us, and the government’s unique ability to propagandise and champion could help a lot. Is the government’s lead visible outside Whitehall and the slim headquarters of the new Local Enterprise Partnerships? I don’t think so. Is a national revolution under way? No. Is every citizen on tenterhooks? Sort of, but perhaps only in a bad way. Should we panic? Not yet. But none of us should doubt the size of the competition, nor how fast the world’s trade relationships are being re-calibrated.