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  1. Wealth
January 26, 2021

Leader: Why the UK should embrace the Singapore model

By Spear's

If calls for embracing the Singapore model mean taking the best of what it does and using it to inspire us in areas where we are flagging, then Spear’s is all for it

Long before the World Economic Forum announced it was shifting its annual jamboree from Davos to Singapore this year, the organisation had identified the city-state as number one for global competitiveness – defined by the ‘institutions, policies and factors that determine the level of productivity’.

By comparison, the UK was ninth in 2019’s rankings. Singapore has been lauded for its pre-eminence in the World Bank’s authoritative ease of doing business index, too. It came in second, behind New Zealand and well ahead of the UK in eighth.

This might well contribute to the prosperity enjoyed by Singapore’s six million residents, whose gross national income per capita is knocking on the door of $60,000. It places the country tenth in the world, comfortably ahead of the UK ($43,000). On top of this, it’s not a bad place to live either – ranked 45th in the Economist Intelligence Unit’s global liveability index, again ahead of London in 48th.

So Singapore is getting quite a lot right. An oft-reported driver of Singaporean success is its education system – and its population’s attitude to education. Back in 2015 the OECD rated it the best in the world, praising it particularly for its attainment in maths and science. Singapore’s 15-year-olds were found, for instance, to be 20 months ahead of their peers in Western countries in maths.

This is borne out in the 2020 findings of the World Bank’s Human Capital Index, which scores a child born today by the level of educational and professional potential they can hope to attain by the age of 18. Singapore is top of the world with 88 per cent, compared to a global average of 56 per cent. The UK is far from shabby at 78 per cent. Clearly the two countries are different.

The UK’s population is more than ten times greater and the economy is accordingly much larger.

Yet look at what Singapore has achieved in the decades since independence in the early Sixties – roughly speaking, an average annual growth rate of 7 per cent – and you might start to wonder what could be accomplished if we took a dose of the Singaporean medicine. Of course, much of what Singapore has achieved – rapid industrialisation (done at possibly four times the speed of Britain in the 19th century) and growth of a sophisticated services economy – are things the UK has already accomplished.

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Likewise, the UK’s educational infrastructure is among the best in the world and its manufacturing sector (where it survives) is often regarded highly. Just look at aviation, for instance. Elsewhere, both countries are leaders in wealth management and related sectors such as fintech – where they are rivals for the global crown, albeit with the consensus lying with London and Silicon Roundabout as the holder for now.

One of the areas where the two countries bifurcate most is on tax: corporate and personal taxes in Singapore are capped at 17 per cent and 22 per cent respectively, and the government there spends the equivalent of 15 per cent of GDP versus 35 per cent here. Whether or not you regard calls for a ‘Singapore-on-Thames’ model to be not-so-coded demands for deep cuts in public spending is a moot point: they aren’t going to happen, certainly not at the hands of any government of Britain hoping to achieve re-election within a five-year timetable.

But if calls for embracing the Singapore model mean taking the best of what Singapore does and using it to inspire us in areas where we are flagging, then Spear’s is all for it. Precisely 200 years after Sir Stamford Raffles set about turning this new city into a lion, Singapore is a credit to the world.

And while the UK government’s trade deal with Singapore is in itself small beer (worth £17 billion a year in trade, according to the government) when compared to the whole, the partnership potential is massive as the UK – and Singapore – continue their progress through the early years of the Asian century.

Read more

How Singapore’s vision of the near-future is bringing Davos to the Lion City

Matthew Goodwin: Why political change in 2021 might be taxing for some

Tom Steyer on Biden, taxes and changing Wall Street

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