| As I enter my final
year as Director General, UK Trade and Investment, USA,
I am reminded of all that the UK and the US have accomplished
together in business over the past five years. While
we have seen our share of highs and lows, the economic
journey our countries have taken together is marked
by a solid partnership that will enable us to take advantage
of the exciting growth opportunities now at hand.
Although today’s investment flows are not back
to the level of the late 1990s, the calibre of companies
making the decision to invest in the UK, and the prospects
of long-term success resulting from these investments,
is unparalleled. This, coupled with continued growth
in technology spending and biotech funding, has resulted
in a considerable upswing already this year and a growing
sense of optimism on both sides of the Atlantic.
This renewed spirit, what I will call the “contagious
enthusiasm” of companies finding success in UK/US
trade and investment, contrasts with the “reckless
abandon” of the late 1990s. It has evolved from
the period of investment paralysis that affected businesses
around the world after 9/11. It signals a focus on smarter
business and, I believe, heralds the dawn of renewed
economic vigour and vitality for the UK/US business
partnership.
The UK was fortunate not to have undergone the recession
experienced by the US and other economies around the
world. In fact, the UK is experiencing its longest unbroken
economic expansion on record, with the first quarter
of 2004 marking the UK’s 46th consecutive quarter
of growth. Particularly remarkable was our growth in
the third quarter of 2003, when the UK economy expanded
at its fastest rate in almost three years. 2003 was,
on the whole, impressive, with economic growth of 2.1%,
confirming the UK as the world’s fourth largest
economy.
And there is no immediate end in sight. According to
the UK Treasury, UK economic growth is forecast to be
between 3% and 3.5% for both 2004 and 2005. This record
of growth amidst challenging times has made the UK one
of the world’s leading destinations for inward
investment, as evidenced by the UNCTAD World Investment
Report 2003, which showed that the UK had the world’s
second largest stock of inward foreign direct investment
(£353.5bn/$639bn). As a percentage of GDP, this
is the highest stock of any G7 country.
There are many industries that have contributed to the
UK’s success – life sciences, aerospace,
automotive engineering, ICT, and telecommunications
to name a few. I will highlight two sectors where we
are seeing significant investment and trade success
– life sciences and ICT. These sectors are intrinsically
linked by three key advantages that exist both in the
UK and the US:
1. Strong R&D, thanks to a leading-edge educational
and science base
2. A skilled and educated labour pool
3. Extensive government backing of industry
The result in the UK is a competitive environment for
inward investors, providing worldwide trade opportunities
for businesses and extensive access to financial markets.
Life sciences
My article in last year’s publication highlighted
the 50th anniversary of the joint UK/US discovery of
DNA, one of the most significant landmarks of the 20th
century. UK scientists, recipients of 46 Nobel Prizes
in the past 50 years, were also responsible for sequencing
one-third of the human genome and have made significant
breakthroughs in health research, such as monoclonal
antibody production and DNA fingerprinting.
Our greatest accomplishments probably still lie ahead.
By many accounts, 2004 could be the year when biotechnology
begins to realise its full commercial potential. The
UK is well positioned to benefit from a pipeline of
innovation. UK firms currently account for 62% of the
products in late-stage clinical trials in Europe(1)
and have produced at least 38 marketed biotechnology
drugs, with seven more waiting approvals. In addition,
at least 13 are in Phase III trials(2).
In terms of funding, there is no shortage on either
side of the Atlantic. This is evidenced by the latest
venture capital figures, which show that £1.88bn
($3.4bn) went into biotech start-ups across the US last
year, up 6.4% from 2002. Venture capital funding in
the biotech sector represented nearly 20% of all VC
investment in the US last year, up from 15% in 2002(3).
In the UK, our strong venture capital base continues
to pour money into biotech. For example, Abingworth
Management closed a £194m ($350m) life sciences
fund in August; Schroder raised a fund worth £222m
($402m) in June; and Scotland put £150m ($271m)
into financing early-stage life sciences companies(4).
The UK is also known for successful commercial spinouts
from its academic community. An example is Lorantis,
an Imperial College – London University spinout,
which raised £25m ($45m) to pay for clinical trials
of its experimental immune treatments – one of
the biggest private finance rounds of 2003. In addition,
a number of recent announcements, such as the joint
project announced by Illinois-based Abbott Laboratories
and London-based Axis-Shield, speak to the momentum
of the UK biotech sector. Another exciting development
was the announcement that Genzyme Corporation would
open a major research facility in Cambridge focused
on antibody technology and its applications in oncology,
renal disease and immune-mediated diseases.
Underpinning all of this public and private sector growth
is the support of the UK government. A prime example
is the £5m ($9m) collaboration between the UK
and the US in the areas of biotechnology and medical
research announced by Lord Sainsbury (Minister for Science).
In addition, in partnership with the Wellcome Trust,
the UK government has committed £0.8bn ($1.5bn)
for the renewal and modernisation of the science base
infrastructure in the UK.
ICT
The UK is also well positioned to take advantage of
global growth opportunities in ICT and this represents
a significant investment opportunity for US companies
looking to break into the European technology marketplace.
Our strength in this sector, particularly in software
development and design, ebusiness, and communications,
exists through a competitive environment marked by strength
in R&D, a skilled and educated work force, and extensive
government backing. With less than 1% of the world’s
population, the UK is responsible for 5.5% of global
R&D in ICT.
For the first time since early 2000, there is growing
optimism in the technology sector. Enterprises that
had postponed large-scale technology initiatives are
beginning to take advantage of low interest rates and
tax incentives to replace outdated hardware and upgrade
enterprise software. This bodes especially well for
the UK, which is the leading location in Europe for
software investment and home to some 95,000 software
and computer services companies.
The UK is also a leading location for networking investment.
With the largest fibre optic network in Western Europe
(with over 3m miles of cable), the UK ranks first in
Europe for fibre optics. In addition, the country has
half the market in integrated circuit applications design
and over onethird of all design houses in Europe.
The UK also has five Internet exchanges across the country,
the highest number of any European country, and some
of the lowest service costs in the world. International
Telecommunications predicts that by 2004 the number
of Internet users in the UK is forecast to grow to 33m.
It is estimated that 66% of the UK population has access
to broadband services, including cable and DSL, and
the UK market for dial-up Internet access (currently
the dominant mode of accessing the world-wide web) is
the most competitive in the world.
Smarter business
Clearly, contagious enthusiasm is driving the pace of
growth and expansion in a number of key business sectors.
With that in mind, the UK Government has aligned and
marshalled its resources to meet the needs of UK and
US firms and help foster their ultimate success. We
have now combined the many and varied trade and investment
resources at our disposal to create a seamless organisation
that we now call UK Trade & Investment.
UK Trade & Investment supports
companies seeking to establish or expand their presence
in the UK by:
• Arranging site visits
• Advising on local, regional and national incentives
• Providing information on the availability of
labour, transport and proximity to customers and to
suppliers
• Facilitating contacts with key private and public
sector companies
• Saving potential and current investors valuable
management time and costs through our free and confidential
service
UK Trade & Investment also offers
a comprehensive range of services to US companies seeking
to do business with their UK counterparts, including:
• Guidance on importing from the UK
• Identifying UK sources of supply for specific
products and services
• Guidance on becoming an agent or distributor
for a UK company
• Obtaining information of forthcoming UK promotional
events and trade shows
• Developing commercial/cultural UK promotional
events
No matter how US companies choose to access the UK market,
or collaborate with British businesses, a multitude
of opportunities exist. The British Consulate-General
in New York and our other posts around the US would
be pleased to help US companies explore business opportunities
in the UK – and turn their contagious enthusiasm
into global business success.
All addresses and contact details
for British Consulates in the US can be found in the
Help from America section on p193 or visit: www.britainusa.com/consular/locate.asp
1 Source: E&Y 2002; 2 Source Biocentury & E&Y
2002; 3 Source: VentureOne, 25 January 2004; 4 Source:
Financial Times, 12 November 2003
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