Britain’s government on Monday unveiled a new interventionist approach to rebalance its heavily services-based economy for the post-Brexit era, in a break with traditional Conservative laissez-faire economic policy, Reuters reports.
Prime Minister Theresa May’s “Modern Industrial Strategy”demands closer collaboration in key industries in exchange for government support, aiming to increase productivity, reinvigorate industrial production and stimulate investment in technology and R&D.
The focus on industry and the shift to a governmental hands-on approach challenges the laissez-faire ideology championed by former prime minister Margaret Thatcher.
May asked businesses to work together to tackle industry-specific challenges, citing examples of successful collaboration that have helped attract overseas investment from the likes of carmaker Nissan (7201.T), and enabled aerospace firms such as BAE Systems (BAES.L) to develop a competitive edge.
In return she pledged to reciprocate with “Sector Deals” that address regulatory barriers, look at how trade and investment deals can be used to increase exports, and support the creation of new institutions to provide leadership, drive innovation or boost skills.
The government said early work had been done on deals for a number of industries: life sciences, ultra-low emission vehicles, nuclear and creative industries. But it said it would work with any sector that could “organise behind strong leadership to address shared challenges and opportunities”.
The plan aspires to distribute wealth more evenly, following decades of industrial decay in parts of Britain. The economy’s narrow base has been blamed for a mood of disenfranchisement that drove many voters to back Brexit.
It aims to boost Britain’s productivity, which has long lagged European rivals Germany and France. It cited the success of targeted government intervention in countries including the United States and South Korea.
The outline of was set out in a “Green Paper” inviting views from industry on the government’s objectives. The government listed 10 strategic pillars behind its strategy such as skills development and improved procurement.
The publication drew positive responses from businesses looking to push their industries to the top of the government’s agenda, ranging from waste management firms to builders of new nuclear plants.
But not all sectors felt they would benefit.
A consumer goods industry executive, who declined to be named, said consumer goods were very far down the priority list. “The high-skilled and high-paid, that’s what drives economic spending and growth. Pharmaceuticals, heavy industry, IT – all those sectors are always going to be the ones that are more favoured,” the executive said.
BACK IN FASHION
Since coming to office weeks after Britain’s vote to leave the EU last year, May has pushed the once-unfashionable concept of industrial strategy to the top of her agenda, creating a new government department to lead the project, and chairing a top-level cabinet committee on the subject.
Britain’s impending exit from the EU threatens to undermine the financial services sector, with several banks planning to shift thousands of jobs abroad because they fear they will lose access to the EU market.
May said last week that Britain would be withdrawing from the single market, and seeking a free trade agreement with the EU instead – a path critics have described as a “Hard Brexit” that would undermine the industrial strategy.
“It’s like the manager tying their team’s bootlaces together while telling them they have a plan to win the match,” said Don Foster, business spokesman for the rival and pro-EU Liberal Democrat party.
May presented the full proposals, including plans to boost the teaching of technical skills and mathematics, and a 556-million pound boost for infrastructure projects, at a specially convened cabinet meeting in northwest England.