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Rediff.com  » Business » 'India biggest challenge to UK economy'

'India biggest challenge to UK economy'

By H S Rao in London
February 08, 2006 00:30 IST
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Fast emerging economies like that of India and China are considered the biggest challenges to the UK economy over the next five years, a new survey has found.

In a study conducted by Deloitte/YouGov, on public attitudes of British people to global economic competition, 79 per cent of 2,704 people identified China as the largest threat to the UK in the manufacturing sector.

India, which now houses a number of call centers for UK firms, was seen as the main challenge to the UK by 45 per cent of those surveyed.

A separate Deloitte report said the UK could fall from sixth to the 12th most competitive global economy by 2010.

The survey found that 64 per cent of respondents expressed a negative reaction to such off-shoring, and a quarter also held the opinion that existing off-shoring programmes should be reversed.

Just six per cent said they supported their continuation.

"The survey results clearly show the uncertainty that exists among the UK population when it comes to the growing prowess of India and China," said Deloitte's head of consulting, David Owen.

"There needs to be a great understanding among the public that the transfer of certain jobs to other locations is a trend that is likely to continue and brings with it opportunities as well as threats. UK-located companies should benefit from, rather than be threatened by the increasingly global nature of the product and services markets," he said.

To help boost UK competitiveness, 75 per cent of the survey's respondents said there should be greater investment in education and training.

A further 60 per cent said there should be more support for small business start-ups.

"One possible way for government to raise skills is for tax credits to be awarded to businesses for training spend, similar to the incentives used to raise UK level of innovation," Owen said.

Deloitte's separate Trading Places report on the world's most competitive countries, put the US in first place, followed by Sweden, Finland, Denmark, Germany and the UK.

By 2010 it estimates that while the US, Sweden, Finland and Denmark will keep their positions, South Korea will overtake Germany; and the UK will drop from sixth to 12th as it is overtaken by the likes of Canada, Japan, Switzerland and Austria.

Accountancy giant Deloitte called for more innovation, enterprise and investment to help prevent the decline.

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H S Rao in London
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