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A globalised British economy
The UK economy that emerges from the current downturn will continue to be defined by globalisation , which will create huge opportunities for British businesses , although it will also bring new competitive pressures .
Increased competitive pressure from emerging economies mean that the comparative advantages of UK firms will continue to be focused in highvalue goods and services based on sophisticated knowledge and skills . The fragmentation of global supply chains means that British firms are likely to increasingly produce and trade in intermediate goods rather than finished consumer products .
They will also be responding to a number of broad global trends :
l Rising global incomes , especially in the emerging economies , will drive consumer demand for sophisticated , higher value-added products ;
l Increased demand for environmental goods and services , both a general function of rising incomes and a general global shift . This will be reinforced by international agreements to reduce carbon emissions which will drive up demand for more low carbon goods and services ;
l New technologies will drive the development of new products . The strength of global demand for products which offer new functionality , entertainment or luxury to both consumers and businesses will remain considerable , even as the life cycles for these products shorten ;
l Ageing populations will also impact on consumer demand . Over the next twenty years the ratio of elderly to the working age population is expected to increase by 40-60 % in the advanced economies . In contrast , emerging economies will see an increase in the number of people under 25 .
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