Bank of England Governor Mark Carney is encouraging small and medium sized service business to embrace the opportunities offered by 4th industrial revolution, by internationalising.
Mark Carney took to the stage at the Northern Powerhouse Business Summit in Newcastle this morning, to give a balanced view on the current state of the world's economy, and of Britain's in the global context, but importantly to encourage small and medium sized businesses in the service sector to broaden their global horizons.
"The point of recalling the past is to learn from it and improve upon it," he said, recounting the history of the North and its industrial heritage in particular. "Sunderland’s automotive companies are at the heart of the world’s most sophisticated supply chains, [and] Atom are working with educational institutions to use machine learning to understand their customers.
"The challenge," he continued, "is to make these successes the norm.
He spoke of his current focus, which is to concentrate on enabling institutions, both finance and trade, which have been identified as critical to bringing prosperity.
"The shadow of the financial crisis is receding; global trade is growing, world GDP grew for the fastest rate in seven years last year," he told the packed audience at the Boiler Shop. And he discussed in some detail the increasing protrectionist rhetoric coming from some countries, and the potential risks of impact should that rhetoric become reality.
Reduced trade flows, disrupted supply chains, and rising costs associated with global trade were all identified; "tariffs could roughly double, and raise US tariffs to rates not seen in half a century."
And after discussing some of the ways in which the current political climate, and Brexit, might affect the economy, and outlining some of the steps the Bank is already taking to protect against those, Mark discussed capitalising on available trade opportunities.
"With the economy on the cusp of a revolution," he said, "people are concerned. How can we make trade work for everyone? We need to pursue more opportunities for trade; those rooted in services, and in small and medium size businesses.
Advances in technology make the world smaller, he pointed out, and the 4th industrial revolution promises an age in which anyone can produce anything, anywhere. Anyone can broadcast around the world. "The future will increasingly belong to these firms," Mark stressed, "with platforms giving them stakes in global markets."
The Bank of England is undertaking what he described as an 'ambitious rebuild' of the backbone of the UK's payment system. The goal? "To create a situation where new payment systems can simply plug in. It won’t be exclusive to the banks, instead opening up the infrastructure to payment service providers." Several, focusing on corporate and retail services, have already gotten involved.
Electronic money will become like its physical relatives, he claims - instantaneous, as the customer reigns supreme. And twinning those with developments in commerce and the question becomes: should the true priority be free trade for small and medium sized businesses, to be stronger and more inclusive?
"Instead of levelling down the system with tariffs," continued the Governer, "there’s a chance to level up by liberalising trade and services. We could cut deficits in half, increase consumer choices and productivity, and use free trade to make growth more inclusive.
"There are some breathtaking opportunities disguised as problems," he concluded. "The 4th industrial revolution will force people to switch both where and how they work. Both could disrupt growth and increase inequality.
"But in those chances lies opportunity, to bring prosperity to all."
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