Britain Must Change If It Is to Keep Its Seat at World's Top Table

BEFORE she set out on her Diamond Jubilee procession, on the morning of 22 June, 1897, "Queen Victoria ... went to the telegraph-room at Buckingham Palace ... She pressed an electric button, and in a matter of seconds, her Jubilee message was on its way to every corner of her Empire.

It was the largest empire in the history of the world, comprising nearly a quarter of the land mass of the earth, and a quarter of its population." So wrote historian James Morris in Pax Britannica.

In that year, it was the Royal Navy that kept the seas safe for trade, and more than half the steamships in the world were accounted for by the British Merchant Navy. If there were two things that made Britain great, it was military might and power as an industrial economy.

For the past 60-odd years we have maintained an enviable relative GDP, a seat on the United Nations Security Council, a feared military, and we are still a nuclear power. For these things, we like to think Britain is still at least in the premier league on the global stage. But does it still look that way to an up-and-coming businessman in India or political leader in China?

It is becoming a matter of consensus that the UN Security Council is outdated, more representative of 1949 than 2009. If its members were picked again today, it is far from clear we would merit a seat on it.

Questions over whether we should keep our nuclear deterrent have encroached so far that they have reached the thinking of even orthodox intellectuals. The late Michael Quinlan, preeminent British nuclear guru and originator of much of our Cold War nuclear strategy, wrote in 2006 "scarcely anyone would claim that the highly unspecific arguments (put forward] would now amount to an adequate case for shouldering the political and economic costs of creating (a] nuclear capability from scratch, if it did not already exist".

What about our economy? In the 19th century, it was powered by industry; in recent decades, by service industries and finance. It will be tougher to compete in the coming century. We have long been unable to compete with a rising Asia on industrial costs, and the Indian IT sector in particular, and we are faced with a European Union keen to impose regulations on our financial sector, which will not trouble many international competitors.

But the main cause for concern should be our own unwillingness to do what we must to create the right conditions for economic success. It is increasingly clear Britain's knowledge sectors are our best hope for regaining a world-leading industry. But the government must support that effort towards building a knowledge economy faster and more effectively. That means putting greater investment into our communications infrastructure and universities, which suffer from under-investment compared to their US competitors. It also means offering the right incentive structures. That means scrapping the 50 per cent tax band and offering entrepreneurs and potential entrepreneurs tax breaks to encourage them to risk their time and their capital to make investments that can pull our economy back up the league table.

What of our military prowess? Sadly, consecutive governments have skimped on defence spending. Twenty years ago defence spending was 4 per cent of GNP, now it has fallen to 2.6 per cent. That has left a skeleton of what was once a feared and formidable force.

If we want the world leaders of tomorrow to recognise our place in the premier league in the future, we will need to readjust our priorities.

Azeem Ibrahim is a research scholar at the Kennedy School of Government, Harvard University.