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We have to own up on the UK economy – we are not a big club anymore | Larry Elliott

Mirroring the England football team and the founders of the football league, Britain has slid down the world economic table

The English football league was founded in 1888, a time when Britain still clung on to its position as the world’s industrial powerhouse, and founder members reflected the fact that the economy’s centre of gravity was north of a line drawn from the Severn estuary to the Wash.

For a football fan, what’s striking about the original dozen clubs – Accrington Stanley, Aston Villa, Blackburn Rovers, Bolton Wanderers, Burnley, Derby County, Everton, Notts County, Preston North End, Stoke City, West Bromwich Albion and Wolverhampton Wanderers – is that not one of them would be counted as a member of today’s elite. Three are midtable in the Premier League, four are battling against relegation and five are plying their trade in the lower divisions.

The downwardly mobile state of some of these grand old clubs has been mirrored by the UK’s slide down the economic league table. What’s more, there are striking parallels between the England team and the national economy: the complacency bred of inventing the game in the first place, the failure to adapt, the many false dawns, the way imported talent has shown up the deficiencies of the domestic workforce and, above all, the belief that with one or two tweaks (step forward Harry Redknapp) all will be well again.

If it is hard to put a precise date on the moment when the UK economy peaked, there is no such difficulty picking the zenith of English football: the moment shortly before 5.30 on a Saturday afternoon in July 1966 when Geoff Hurst’s shot thumped into the net at Wembley gave England a 4-2 victory over West Germany in the World Cup final.

Ever since, it has been a story of profound underachievement as other countries have exposed the limitations of the country that gave the world the beautiful game.

At first, only traditional rivals put England in the shade: Germany, Brazil, Argentina. More recently, though, the national team has struggled to cope with the challenge from the game’s lesser lights, drawing with Algeria and the United States in the group stages of the 2010 World Cup in South Africa before being thrashed 4-1 by the Germans in the first knockout round.

There was plenty of soul-searching when the lavishly paid England “stars” flew home in humiliation. In the past, excuses for World Cup failure had been that the hot weather sapped the players’ strength; that they were not used to games at high altitude; that they had been missing key players; that British coaches were light years behind their continental counterparts; or that they had been robbed by bad luck or by cheating foreigners.

None of the familiar get-outs applied to a tournament played in South Africa in winter when a full-strength England was beaten by a demonstrably superior German team. The side was even managed by an Italian, the Football Association having come to the conclusion that if Japanese management could breathe new life into the car industry, Fabio Capello could do the same for 11 men kicking a ball around on a large lawn. He couldn’t.

Now let’s look at the economy. Initially, the challenge came from the United States and Germany, but after the second world war the UK was also eclipsed in terms of growth rates and living standards by France, Italy and the Scandinavian nations. More recently, the threat has come from the bigger emerging economies of India and China.

Warning signs of imminent decline have too often been ignored and even when they have been heeded, wrong lessons have been learned. Excuses (poor management, stroppy trade unions, too much or too little Europe, too great an appetite for grandiose projects, a snobbish approach to “trade”) have been trotted out. All sorts of remedies have been tried in an attempt to bring back the glory days and all, sooner or later, have failed.

So let’s try a thought experiment. Imagine there was the economic equivalent of an Alex Ferguson, an Arsène Wenger or a Redknapp who could be brought in to take control at UK FC. What would he say? Firstly, it would be clear that the economy has been far too dependent for far too long on one or two stars – the City and the housing market – that are in decline.

Successful economies, like successful football teams, have a strong central core, and are well balanced between manufacturing and services and good at developing talent.

This is much harder to achieve than it looks. It is not just a question of spending money nor of assuming that simply clobbering the City will lead to a thriving manufacturing base. As Simon Tilford of the Centre for European Reform has noted, as a share of its economy Italy’s manufacturing sector is as big as Germany’s, while France’s industrial base is as small as Britain’s. Rebalancing the economy is going to involve more than simply depreciating the currency or offering infant industry protection of the sort offered by the emerging Asian economies, since that assumes there is enough there to protect. As things stand, there isn’t.

What countries such as South Korea, Taiwan and China understood was that getting macro-policy and industrial policy right was vital but still only half the story. In addition, there was intensive investment in education and training over many decades, which is now reflected in the international league tables produced by the Organisation for Economic Co-operation and Development. The latest Programme for International Student Assessment in 2010 showed the UK in 25th place for reading, 28th place for maths and 16th place for science: mid-table and falling. As with football, the reality is that other nations are now a lot more skilful than we are, and there is plenty of work to be done on the training ground. The mantra should be that we have to brain up to build up.

But first we have to own up. Perhaps the most important job for a new manager would be to tell the team he has inherited that it is not nearly as good as it thinks it is. Britain has not challenged for the world economy’s Premiership title for 100 years, but for most of the past century we have comforted ourselves that we are a big club with a proud tradition, and that with a couple of new signings could once again give the best a run for their money.

Recent results suggest otherwise. The recession was brutal and the recovery has been weak. Living standards will not return to their 2003 level until 2016. There are over one million young people unemployed. There are no new sources of growth to replace financial and property speculation. The old industrial heartlands have been decimated. The Treasury is skint. Britain is not an Everton or an Aston Villa, comforting though that thought may be. The table does not lie: we are a Bolton or a Blackburn, holding on to our place in the Premier League by our fingertips. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds