Matt Lerner

The UK is in dire trouble. We've had three strikes. Let me look at the UK through the lens of an entrepreneur... 1. Core product 2. Positioning 3. Talent Prior to 2008, the UK had a clear core product, a strong position and the ability to attract talent and then it systematically dismantled all three. Strike 1: The destruction of the core product. Every successful country has at least one big core product. The core product of the UK was banking, finance and insurance. After the fall of the British Empire the one dominant industry that the UK was known for globally was all things finance. From investment banking, international structuring, trading, insurance and lending - if it related to money, London was considered a leader at it. This industry became an engine-room for money flowing in and around the UK. Germany has cars, France has luxury goods, Australia has mining, the UK has finance. In 2008, the whole world came to the brink of collapse thanks to rogue bankers. In the USA and in the UK, toxic financial products almost destroyed the whole system. The UK jumped in heavy and started regulating the whole industry as part of a sweeping bailout program. Part of that was to really take away the more aggressive, nuanced or "global" products that the general public wouldn't understand. Additionally, we opted to limit bonuses on bankers. Rightly or wrongly, this had the effect of moving the really profitable end of finance away from the UK. The USA did a fair bit of regulating too but banking was only one of many strengths in the USA. To Briton, taking the wind out of the sails on banking was like telling Ricky Gervais he's not allowed to tell offensive jokes. Act 2: Losing a strong brand position. A successful country needs to be known for something that is uniquely positioned to do. By 2015, the UK has doubled down on being the place for global businesses to have their European head office. Our strong brand positioning was to be the EU HQ. All the Americans loved it and the biggest brands set up offices in the UK to handle their EU operations. It was easy to send an executive from Texas to London. The UK was getting back on its feet with a strong "reason to exist"... and then Brexit. From a branding perspective, Brexit would be the equivalent of Roger Federer switching career to table tennis because it's less bureaucratic and independent than the tens circuit. Maybe that's true but there's just not as much money in ping pong, compared to tennis. Imagine if Apple decided it would not make its phones compatible on several major networks because these networks are annoying and demanding to work with. Even if that were true, it would be a costly decision. The UK stepped out of a 500M person economic block as the dominant voice and failed to replace its brand with anything new. To be fair, it took Singapore and Dubai 50 years to establish their brand internationally - and that's with political unity. So in 40 years from now, it might turn out to be a good decision but in the short term it was a costly way to go. I get it. For many reasons, the EU wasn’t a positive force for the UK and there are genuine reasons people wanted to leave. But from a positioning point of view, it moved the UK into no-mans-land (at least in the short term). Strike 3: Repelling talent. The UK's last saving grace is extraordinary talent. It's hard to overstate just how far above its weight class this island punches. In media and music, the UK has produced countless international super-stars. For a country with 67M people, we seriously crush it in medicine, technology, aerospace, engineering and entrepreneurship. We have some of the best universities in the world. Then there's London - Glorious London! This place by default is a magnet for talent. The best of the best want to come to London to collaborate and create the future. It's naturally a melting pot of money, ideas, work-ethic, entertainment and energy. What could go wrong? Lots has gone wrong. To start with the top rate of tax kicks in painfully low compared to the USA. In the USA, the top rate of tax (37%) kicks in at about $600K ... in the UK, the effective rate of tax on £100K hits people at 60% before reducing down to 45% at £125K. It's brutal. After you pay that tax, you have 20% VAT, then council tax, then CGT, then stamp duty, the list goes on. The UK is so out of control with taxes that the government spending now equals 45% of the economy! Add to this the cost of housing in London, relative to what you get is expensive. Then there's the BIG one - the culture of hating the rich! In the USA, they love to see people succeed, whereas in the UK it's seen as a problem that needs to be solved. It's no wonder 240,000 brits have now moved to low-tax, "high-achievers welcome" Dubai. It's no wonder that many super-stars in the UK end up in the USA. It's almost always the case that successful startups in the UK sell to US companies relatively early in their journey. These are the 3 ways the UK has shot itself in the foot. If it's going to recover, we need a strong core product to sell to the world again, we need to become known for something unique in the world and we need to become a magnet for the worlds most talented people to come and create here. These are the three things that create an "engine room" for the British economy. No engine, no momentum, no progress.