The wealth created by our arts and universities is being choked. The US and others are happy to gain from those we shun
Exports plummeted alarmingly in this week's figures, hard on the heels of the credit downgrading. One economic woe follows in another's footsteps, a domino of disasters. This is the death spiral, longer than a lost decade.
Remember when trade was to be our great escape? Government forecasts said net trade (exports minus imports) would rise by 2.4%, as we stole a march on our neighbours. Since then sterling has dropped by a quarter, its biggest fall since 1945. But devaluation has brought no export bonanza, with net trade falling. Yet 70% of government cuts are still to come and David Cameron promises "further and faster" deficit cutting.
So how might Britain earn its living? What are we good at? What's our USP? A decade ago financial services was the only game, Labour believing the City's own myth that it was the golden goose. Since those eggs broke, the City has lost international market share. An economist for the bank UBS tells the Financial Times that despite offering financial services 25% cheaper due to the fall in the pound, "no one wants them".
So what else can we sell? Two exports rich and ripe for growth are our universities and arts, as valuable to life here as for the wealth they earn abroad. Yet the government actively stymies both, obstructing those two sectors where Britain has – but may easily lose – an international competitive trading edge.
Attracting foreign students to prestigious universities should be a booming export trade. Five chairs of parliamentary committees joined in an unprecedented joint call for visas for non-EU students to be excluded from the Home Office's cap on net immigration figures, a cap blocking an £8bn industry. Genuine university students should count as temporary visitors, valuable in cash and culture for our trading future. But this week the abrupt government answer was no. Immigration policy trumps all else.
Though David Cameron was in India last week, promoting the value of studying in Britain, Universities UK says foreign student numbers are falling. The Migration Matters Trust, run by the Tory MP Gavin Barwell, warns that 24% fewer Indian students and 28% fewer postgraduates came last year. Faced with complaints about the difficulty in getting UK visas compared with Germany or the US, Cameron in India claimed there was "no cap, no limit", nor any limit to the "graduate level" jobs foreign students can take. That was disingenuous: potential students are put off by stiff visa barriers and turn elsewhere.
Cameron will plainly miss his "net" immigration target of fewer than 100,000 a year by 2015: it now stands at 183,000. With no control over how many people leave or how many EU migrants arrive, choking off visas for non-EU students has been the softest target. While bogus colleges are rightly banned, all universities and well-respected institutions should see their applicants fast-tracked and welcomed.
As soon as Cameron returned from beckoning wealthy Indians he headed straight to Eastleigh to compete with Ukip in immigration fist-shaking – as if India, its traders, politicians and students might not be listening too. India's investment abroad is growing, its trade has doubled in two years, but Britain's share of that is falling. As Barwell warns: "The tone of our domestic debate in immigration matters internationally."
Universities and their cities urgently need the money foreign students bring, but what matters most are the cultural bonds forged with future leaders and opinion-formers. Canada, America and Australia are gaining from those we shun with our rebarbative, dilatory visa system and increasingly xenophobic politics. As Conservative leader, Cameron is best placed to change the terms of the immigration debate – if he had the spine. Of course there must be secure borders and well-enforced rules, or all sense of community is at risk. But if Cameron faced voters with sobering facts on shrinking trade and the value of cultural exchange he could persuade them away from Ukip simplicities to keep the xenophobes in a small corner. Instead, an invaluable export is harmed by refusal to exclude student visas from the cap.
Look now at the neglect of our other main asset. All the arts – theatre, music, painting, video installations, dancing, writing and the rest – punch magnificently above our national weight. Look at War Horse, Les Misérables and hundreds of productions nurtured by state subsidy that earn billions around the world. Look what the BBC brings – yet it suffered a purely vindictive hit to the licence fee. The Arts Council's minuscule budget was cut by 30% and took another hit last December. It gets just 0.05% of government funding and earns over 10% of our exports. Pound for pound, its phenomenal yield is unmatched in cash or rich social value by any state investment. Despite cuts, councils invest heavily, contributing almost half the money the arts receive. Why? Liverpool, Manchester or Brighton's leaders will extol what art does for their cities, in the cashable and the ineffable.
Any accountant calculating how Britain can earn and where we should spread our wings would look at state priorities in bafflement. The City destroyed us. Defence and recent wars cost a fortune and bring neither pelf nor respect. Soft power is cheaper than the military kind, and it works. But don't look to this month's budget for an iota of vision to re-imagine how we might be, to reflect the vision we saw fleetingly in that Olympic ceremony. No chance, even on the hardest of commercial reckonings, that Cameron and Osborne will invest in Britain as a potential powerhouse of creativity and intellectual energy.