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Blair plan to meet 'Chindia' threat?

The UK PM's recent declaration of 500 steps to cut red tape in bureaucracy is being seen as a response to growing Asian threat, reports Vijay Dutt.

india Updated: Dec 13, 2006 23:11 IST
Vijay Dutt

Britain's Prime Minister Tony Blair's recent announcement of 500 concrete steps, large and small, to cut red tape in the British bureaucracy, is being widely seen as a response to the growing economic threat to the country from India and China.

The measures, which range from simplifying forms to providing fire safety certificates more easily is estimated to save individuals, corporates and charities over 14 billion pounds (Rs 119,000 crore).

Blair claimed that he would soon sweep away another 500 administrative 'burdens', which would save them another 2 billion pounds.

Obviously Blair is keen to give a sharp competitive edge to British business in global trade. "The UK is one of the best places to do business and we need to keep it that way," he declared.

Both he and Chancellor Gordon Brown, the next prospective tenant of 10 Downing Street, have been voicing fears of British businesses being bruised by China and India.

For over a year, Blair and Brown have been warning about the rapidly growing economy, industrialisation and cheap labour in both the countries, and saying at every possible forum that if quick remedial actions were not taken British business would be left behind.

In his pre-budget speech last week Brown said, "In the next 10 years, the competitive challenge is even more profound. Once responsible for just one-eighth of the world's growth, China and India will soon capture almost half. Increasingly they are competing not just on low cost, but on high skills."

The Chancellor rattled off figures. "While every year Britain adds 75,000 new engineers and computer scientists, India and China add half a million. While annually Britain turns out quarter of a million graduates, India and China now graduate four million." The way out for Britian, he said was, "Economies like ours have no choice but to out-innovate and out-perform competitors by the excellence of our science and education, the quality of infrastructure and environment, and by our flexibility and levels of creativity and entrepreneurship."

There is also an ambitious target to cut unnecessary bureaucracy by 25 per cent by 2010, said the head of the Better Regulation Executive at the Cabinet Office, William Sergeant. However, he qualified that there were some things that would not be abolished, such as work permits, which is a sore point for Indian businesses. The Liberal Democrats trade and industry spokesman Edward Davey was equally sceptical, "After nine and a half years in office it is rather late for the prime minister to don the mantle of deregulation."

But the key underlying question is whether emerging economies, notably India and China, pose a threat to, or offer an opportunity for British business. This was openly discussed for the first time at a recent meeting of the Confederation of British Industry (CBI) which Blair addressed. "This is the background against which any discussion has to take place," observed Blair.

"We see, for the first time, true globalisation... in terms of a shift of economic power from the West to the East," observed Sir Martin Sorrell, chief executive of the advertising giant WPP. But he also stressed that globalisation could instead of being perceived as a threat, should be seen as "something we must capitalise on. Both China and India are fundamental to the growth and prosperity of any multinational company."

Stephen Green group chairman at the HSBC bank too summed up, "This is fundamentally an opportunity rather than a cause for pessimism."

First Published: Dec 13, 2006 23:11 IST