ALEX BRUMMER: Imagine what we could do if we increased R&D spend

Critics of Britain’s economic performance (and there’s no shortage) have developed a habit of comparing the UK to other advanced countries.

The UK had the highest inflation rate until it didn’t, when it was surpassed by the eurozone last month.

For example, who knew that in the Netherlands, a much admired trading and trading partner of this country, consumer prices rose by 14.5 percent last month against 9.9 percent in the UK.

Or that the British economy grew by 0.2 percent in the second quarter when much of the continent showed little growth.

Still, the story goes that the UK was the last of the G7 economies to fully return manufacturing to pre-Covid levels.

Here’s a ranking that we rarely read about. In 2022, Britain, ranked fourth out of 132 countries worldwide on the Global Innovation Index, was only behind the US and two smaller European economies, Sweden and Switzerland.

In terms of innovation output – how much was returned for the amount invested – the UK comes in third.

Perhaps most notably, UK spending on research and development is lagging behind many rivals at 1.7 percent of total output. The industrial strategy was rejected by the Boris Johnson Tories.

But just imagine how much better we could do if we met the goal of increasing R&D spending to 2.4 percent of GDP by 2027.

The high rank of the UK is built on several pillars. We are ranked third in creative industries and fourth in new technologies.

One of the reasons for its leadership in everything from life sciences to artificial intelligence is the country’s major research universities, which are ranked second in the world behind the US.

One of the reasons this paper has campaigned hard (with limited success) to keep our own technology and engineering businesses in the UK is the concern that patents and intellectual property often escape abroad.

Therefore, deals like France’s Schneider attempt to take full control of infrastructure software specialist Aveva must be resisted. Not least because Schneider has a close relationship with China, which acts like a giant vacuum machine when it comes to sucking up Western technology.

Liz Truss’ efforts to channel growth by keeping taxes low and encouraging entrepreneurship, entrepreneurship and effort are keeping Britain on track.

But just think how much better it would be if official R&D budgets were pumped up and the success of the ‘Patent Box’, introduced by ex-Chancellor George Osborne, could be boosted through super-tax breaks.

debt trick

In today’s volatile markets, Credit Suisse’s decision to buy back up to £2.7bn of its own debt is a confidence boost.

It repays the loans in sterling, euros and dollars at a big discount, making a capital gain. It also shows that despite the abuse the bank has endured in recent days, it has enough money to weather the storm.

Connoisseurs of the financial crisis will recall that several bank failures were triggered by the quiet, unprecedented run on deposits as nervous financial and business players rushed to find safer homes.

If demonstrating sufficient liquidity was the goal, it worked: stocks rose 12 percent and yields on credit default swaps fell, a measure of risk.

As useful as this exercise has been, there is no escaping the fact that Credit Suisse’s reputation has been shattered.

Its market value, £10.7 billion, is meager and remains on the Swiss National Bank’s watch list. Magic tricks, such as paying off debt, can only buy time.

Local hero

The road back from the pandemic has been brutal for British pubs.

Many have adjusted opening hours due to falling trade and the average price of £5.50 for a pint in London isn’t helping.

Liz Truss’ growth plan is designed to help through task freezes and help with utility bills. Confidence is returning at Wetherspoons, with sales up 10 per cent from the most recent nine weeks and losses reduced to £30.4m in the year to July, from a whopping £154.7m shortfall last year.

Chief executive Tim Martin says customers are rediscovering their pre-Covid thirst ‘but don’t turn off the lights’.

If National Grid’s warnings are taken seriously, they can be dimmed anyway.