Britain built on brainpower

2007

For some it'll be evidence of Britain's continuing industrial decline, for others the sign of a country at the forefront of a brave new world. While Germany may still be known for its cars and Japan its micro-electronics, a new report claims that Britain is building a global reputation on the back of the export of knowledge.

Research from British think-tank The Work Foundation has argued that "knowledge services", or the selling of specialised brainpower, is now the one category of economic activity in which the UK appears to be leading the rest of the world.

Its findings come just a week after a study led by Microsoft predicted the UK would within eight years be beating the U.S in knowledge-based areas such as internet-based start-ups and digital special effects.

The Work Foundation has analysed official government trade figures and found that in 2005, the UK exported about £75 billion-worth of knowledge services – up from £28 billion in 1995, a rise of 170 per cent.

This meant that such services were now worth some 6.3 per cent of the country's GDP and a quarter of all UK exports – significantly more than any other major economy.

Ian Brinkley, director of the foundation's knowledge economy programme, said: "It may not be a cause for draping oneself in the flag, but in pubs up and down the land, people ask what Britain does these days to make its money.

The answer is increasingly apparent that it sells specialist brainpower to the rest of the world.

"We trade on ideas, knowledge and technology-related industries much more than other big economies do.

"As other developed countries also move in this direction, Britain is in a good place to compete in export markets. It's a real economic strength: we sell more 'knowledge services' as a proportion of overall exports than anyone else, and that includes the U.S," he added.

Knowledge services, argued the foundation, spans a wide variety of industries and activities that all rely on ideas, high levels of specialist knowledge, and the exploitation of science and technology.

These included research and development, engineering and technical services, legal, accountancy, consulting and advertising services, income from royalties, licence fees and intellectual property financial services, it argued.

The research also concluded that the traditional division between manufacturing and services was now breaking down.

The manufacturing sector itself generated many knowledge service exports – in business services, royalties and licence fees, technical and trade related services.

So, rather than the "pure production" work of making things, jobs in manufacturing today involve designing, maintaining, advising and financing activities.

In addition, manufacturing itself was changing. High-tech manufacturing now provided a bigger share of UK manufacturing exports than Germany, France and Italy and was comparable to the US and Japan, the Work Foundation said.