The new rules of competitiveness
The effects of external forces on business strategy & skills
JLA: Do you see more global volatility in 2011?
SG: Yes. After the financial, economic and social crises, we're now dealing with a monetary crisis. Uncertainty about the dollar and euro will be exacerbated by huge ($6,200bn) liquidity in emerging economies, who will probably diversify into other financial assets. Meanwhile China will continue to oppose a Yuan rise, but may be persuaded to accept it due its own nascent inflation.
JLA: Will the BRICs continue to provide the engine of growth?
SG: Yes, but not necessarily to the benefit of Europe and the US. The big revolution in modern economics ('Globalisation 2.0'?) is the emergence of a southern block - below a line going from Mexico to Moscow - which is increasingly self sufficient in raw materials, markets, finance and even technology. This year, more than 60% of Chinese exports will go to other emerging nations.
JLA: Do you see any changes in Eurozone membership?
SG: No, there's very little possibility of a member defaulting or leaving the eurozone - though debts may be rescheduled. (California is bankrupt, but will it leave the dollar zone?) However, more permanent mechanisms will be created to bail-out countries or review their economic and budgetary policy assumptions. The key issue is, who will succeed Trichet at the ECB - a German or an Italian?
JLA: What are the relative strengths of the UK and German economies?
SG: Germany is more diversified and export-oriented than Britain. They can also rely on a very competitive layer of medium sized companies (often family owned), which are thriving on international markets.
JLA: Are the right measures in place to rebalance the UK economy?
SG: I strongly believe there's no competitiveness today for a country without home-grown technology and enterprises. I think we're going to see re-industrialisation, or at least new controls on industrial activities. As a result many companies will re-assess their outsourcing and overstretched global manufacturing capabilities.
January 2011
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