A growing number of major U.S. corporations are asking private consultants here where to place their investment bets in the 1980s. To the surprise of several, many are being told that Britain could well perform Europe's next "economic miracle."
To be sure, economic miracles are relative. What the American executives are hearing is that Britain's economic growth is likely to be much steadier and markedly higher than in the past. However, even the most optimistic forecasts - a yearly gain in output of 3.5 to 4.5 per cent - is well below the explosive rates achieved by Germany, Italy, France and Japan in the 1960s.
The big difference here, the consultants agree, is North Sea oil and the huge surpluses in the balance of payments it is almost certain to create in the next decade. This will make only a small contribution to economic growth. But it will free Britain from the stop-go policies, alternating expansion and contraction, that held growth below even Britain's capacity.
"We're always wary in the U.K. of forecasting good times," said Hywel Jones, a former Oxford economist and now a director of the Henley Centre for Forecasting. "But it's very difficult to see how we can forecast bad times or even times as bad as the recent past."
"It's easy to create an economic miracle scenario, he said."
Jones' private consulting business has boomed in the last 18 months, thanks to inquiries from American firms. He has directed or taken part in wide-ranging studies of Britain's economic and political prospects for 11 major U.S. firms.
So far, there has been little corporate investment money to match the forecasters' months. It is not clear whether the U.S. clients are still digesting what they have been told or whether they remain skeptical.
A possible sign of things to come, however, may be the Ford Motor co. Using its own research specialists, Ford decided to build in South Wales a $330 million engine plant to serve its European models. Indeed, the auto company kept its choice so close to its Dearborn vest that it frightened Prime Minister James Callaghan into thinking the plant might go to Spain or Germany.
So allaghan gave Ford concessions that will slice an estimated $125 million off the investment cost. The chances are that this deal in exchange for the creation of 2,500 jobs was not needed to win the plant.
Perhaps the most striking feature of the studies requested from Jones and others is their broad range. The U.S. companies are not simply asking, as in the past, where to locate to minimize costs of materials, labor, taxes, transportation and the like. Instead they are seeking broad social, economic and political comparisons of Western European nations.
The central question they ask about Britain is whether its plight is as gloomy as it has been pictured in much of the media here and abroad. Jones and his colleagues are replying that "ther definitely isn't a new British disease," that Britain's comparatively low industrial productivity goes back a century or more.
The consultants are arguing that Britain's postwar growth is the fastest in its history. But it has balked every few years by a balance of payments crisis that has forced the government of the day to cut back.
Now the oil, which could add as much as $25 billion to the overseas accounts in 1985, transforms the picture. "I tell them it's like having a big bankroll in a seven-card stud poker game," said Jones. "It opens up a new variety of options."
The corporations inevitably ask whether poor government policies could wipe out the surpluses forecast for the 1980s. Jones answers "only by stretching the bounds of plausibility." To back this up, he has tried to estimate the effect of every major policy mistake in the recent past. If they all occured together, he calculates that Britain would still be in the black.
The U.S. firms are worried about the drive in Scotland for independence and the rapidly growing company of MP's who are neither Labor nor Tory. Won't that mean no majority government in the 1980s, a weak central power?
The consultants' answer is that the nationalist pressure is likely to grow and minority government could well mark Britain's future. But they argue that this will prevent the major parties from enacting ideological measures, will insure that decisions reflect a consensus and business will be spared radical change.
The political scientists who contribute to the studies mostly think that some self-government for Scotland, Wales and possibly Ulster is in the cards.But a federal Britain, they say, would be a novelty and no disaster.
Few of the corporate clients, says Jones, pose the unsophisticated question frequently raised in popular, prints, the prospect of a Britain dominated by "Communist" unions. For those who do, the consultants reply that the danger of radical disruption is far less here than in France, Italy, Germany, Spain or Portugal. There are some Communists in key positions in a handful of British unions. But they survive, the argument runs, only s long as they reflect the bread and butter demands of their members and are replaced when they don't.
Jones identifies the big shift in interest towards broad-based studies with one requested by General Electric Co. about 18 months ago. The research for GE was put together by a group of Oxford academics from several disciplines who style themselves Oxford Analytics, a consulting firm.
Among others, Jones has recently worked for Eaton Industries, the Cleveland-based conglomerate and Britol-Myers, the drug firm. These corporations regard the studies they have paid for as their private property and do not allow direct quotation.
As the consultants see it, the biggest cloud on Britain's horizon is the growing number of umemployed among those younger than 25. A widening pool of idle youths is a source of political and social danger here and elsewhere in Western Europe. Even the highest growth rate forcast for Britain will cut sharply into this discontendted group.
The only bright gloss Jones can put on this problem is that Britain will be better place than most on the continent to relieve the stress of youth unemployment, again because of the freedom of maneuver allowed by oil surpluses.