It has long been my view that being part of the European Union has narrowed our vision. Economics textbooks tell us that it is always easiest to trade with our nearest neighbours. However, that has created a dependence on the EU which, since the adoption of the euro by a majority of countries since 2000, has been sclerotic in growth and innovation.
As an EU member, but one outside the Eurozone, the City of London was also vulnerable to detrimental decisions on technical issues such as bank bonuses and short selling on the stock market.
Britain is at its best in the service industries which comprise 70 per cent-plus of the nation’s economic output. There is a curious misconception that this largely comprises haircuts, nail bars and coffee shops. The truth is that the services in which we excel are finances, professions, the creative sector, science and technology.
If we are to make a success of Brexit, with the right vision, the nation’s best days may be ahead. There is a lack of recognition that we excel in services earning big trade surpluses with both the EU and our single biggest trading partner, the US. With more than 50 per cent of world trade now represented in the Pacific region, there is an enormous contribution the UK can make there.
We are all acutely aware how many of the players on Britain’s high streets — Tesco, Marks & Spencer, upmarket Burberry, Topshop and Sainsbury-Argos — all, one way or another, have a British-Jewish heritage. A visit to Willesden Cemetery is always a reminder of that past. But Jews are also playing a critical role in responding to the post Bricks & Mortar economy.
Simon Wolfson, a scion of the Great Universal Stores dynasty, has been able to take Next past M&S as the clothing and homewares shopping band of choice through its embrace of online shopping, long before Covid made it a necessity. As M&S has moved into loss for the first time in its history as a publicly quoted enterprise, Next, through its early adoption of digital and simple concepts such as click and collect (which repurposes stores) has this year outshone almost every other apparel groups through a series of profits upgrades.
When Tim Steiner and three colleagues from Goldman Sachs floated Ocado on the London Stock Exchange in 2011 there was enormous scepticism and one City broker dismissed the company as having a name beginning with a zero and worth zero. What analysts and investors failed to recognise that the value of Ocado was not just the delivery of groceries to your door (as valuable as that has been in the pandemic) but the robotics in the warehouses and the artificial intelligence which drives efficient servicing of customer needs.
Ocado technology has demonstrated it has great international value. It has been sold to retailers around the world from Casino in Paris to America’s second largest supermarket chain, Kroger. The value of Ocado shares has rocketed and at £18bn it is now worth more than M&S, Sainsbury, Morrison added together. Its current worth is not far short of UK grocery leader Tesco at just over £20bn. M&S, which not so long ago was the highest rated retailer on the London Stock Exchange bought into Ocado with a £700m distribution deal when it found it lacked the technology and reach to go it alone in grocery deliveries.
An early exponent of how digital is going to change the world was advertising and market supremo Martin Sorrell. He recognised more than a decade ago that WPP — the creative enterprise he effectively built — had to go digital. While still at the helm, he transformed media buying, diverting large swathes of his clients’ advertising budgets from traditional media, such as newspapers and broadcasters, to social media platforms largely controlled by the Silicon Valley giants.
When he parted company with WPP in the spring of 2019 after a dispute over his conduct as chief executive (he has always claimed to be a “good leaver”), he started all over again by setting up S4 Capital, the world’s first fully digital advertising agency. Sorrell argues that his new fleet-of-foot group has found a “digital sweet spot”. Income has soared (along with the share price) and S4 is showing that it is capable of winning new business, ranging from the BMW/Mini account in Europe to T-Mobile and Swedish based fintech group Klarna.
Britain’s skills in building creative businesses such as advertising are often not fully recognised. On some measures the UK’s creative industries ranging from Sky (now controlled by Philadelphia-based Comcast, founded by the Jewish Roberts family) to Formula 1 and writers such as JK Rowling account for almost 10 per cent of gross national product. What makes it particularly attractive as an opportunity post-Brexit is that most of the activity is not included in trade agreements and deals are done company to company, nation to nation.
The pandemic has demonstrated the value of Britain’s four great research universities, Oxford, Cambridge, Imperial and UCL, and the work they and other centres of learning such as Southampton have done on therapeutics, ventilator design and vaccines.
Many of today’s great scientists walk in the footsteps of the late great Rosalind Franklin, whose work has been central to the understanding of DNA and RNA critical to the treatment of viruses such as Covid. She is widely regarded in the research community as the most brilliant pioneer who was never awarded the Nobel Prize.
The building blocks for Britain’s post-Brexit economy are in place. In the City of London trading in the renminbi (the Chinese currency) already exceeds that of the euro. The big American investment banks, such as Goldman Sachs, are still showing their faith through vast new campuses in the City housing not just their European activities but their global operations.
But if the UK is to prosper it will need to lift its game. That means boosting productivity. To do so requires heavy investment in modern digital infrastructure such as super-fast fibre cable and pushing ahead with big projects such as HS2. We also need governance reforms both in Whitehall, the regions and the nation’s boardrooms. It is our habit to say it quietly, but the Jewish community is going to be a vital part of the journey to the sunny uplands.
Alex Brummer’s new book ‘The Great British Reboot: How the UK can Thrive in A Turbulent World’ is published by Yale University Press at £20
