Civitas - The government’s industrial strategy risks undermining post-Brexit economy
New Civitas pamphlet says industrial strategy will fail to halt deindustrialisation and does nothing to capitalise on the opportunities from leaving the EU.
A bold industrial strategy would have reindustrialisation as its strategic goal, not through unsustainable subsidies but by establishing competitive advantage.
The strategy should systematically remove barriers to reindustrialisation, including Britain’s high energy costs, but decarbonisation has been prioritised instead.
The Queen’s Speech says ministers ‘will spread prosperity and opportunity across the country through a new modern, industrial strategy’, but a new Civitas pamphlet on the government’s industrial strategy warns that it will fail to halt deindustrialisation and risks undermining Britain’s economy as the country prepares to leave the EU.
Its author, strategy analyst Rupert Darwall, says this is all the more worrying as a strong economy is needed to make a success of Brexit: even the best Brexit deal won’t make the economy strong.
‘A bold industrial strategy would have halting and reversing de-industrialisation as its strategic goal, not through unsustainable subsidies but through sustainable competitive advantage,’ Darwall writes in Going Through The Motions.
He calls for an industrial strategy that removes the barriers to reindustrialisation, including high energy prices, developing Britain’s natural energy resources and abolishing the carbon price floor.
‘The lower energy costs go, the greater the competitive advantage, the more Britain can export and the greater Britain’s ability to attract foreign direct investment. Overseas trade is vital for post-Brexit Britain.’
Darwall shows how for both medium and large industrial consumers, UK electricity prices are far higher than any other EU nation. For large consumers they are double the EU average and for medium users, more than 50 per cent higher. A post-Brexit free trade agreement with the US, where energy costs are also much lower, would expose UK manufacturers to a further competitive disadvantage.
‘Access to cheap energy would make British industry more competitive, yet at the moment, industry pays more for energy than any other European country. A free trade agreement with the United States would leave industry even more exposed as American energy costs are less than half those in the UK,’ Darwall writes.
‘Unless the Government pre-emptively adopts a realistic energy policy based on driving down costs, a free trade agreement with the US would likely lead to intensified UK de-industrialisation.’
Addressing the weak productivity that has plagued the economy since the financial crisis is the biggest economic challenge. Yet the green paper shows little sign of the analytical rigour and structured thinking needed to create an effective industrial strategy and take steps to grow high productivity sectors.
Thanks to North Sea oil, Aberdeen has the highest productivity of any city region outside London, yet the green paper is silent on the potential of fracking to generate wealth and prosperity across the North of England. ‘A laundry list of existing government policies is not a strategy nor does it constitute a break with post-Brexit business-as-usual,’ he says.
In a foreword, Civitas director David Green writes: ‘We will soon be independent and able to devise our own strategy for enterprise without getting permission from Brussels under the ‘state aid’ rules. There is plenty to like in the Government’s consultation document, but overall it is a gigantic missed opportunity.’
Latest News from
IFS - End of furlough likely to be particularly tough for older workers17/06/2021 11:35:00
While a lot of the focus on the employment effects of the pandemic has, rightly, been on the young, employees over the age of 65 were 40% more likely to be furloughed in late April than those in their 40s (14% versus 10%).
“The Bank of England should end its asset purchases now”: IEA expert comments on ONS inflation figures17/06/2021 10:35:00
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, responded to consumer price inflation figures published by the Office for National Statistics, which show inflation has jumped to 2.1 per cent
IFG - Covid-hit public services could be further disrupted by government targets17/06/2021 09:35:00
Government targets in public services may do more harm than good, warns a new paper from the Institute for Government.
Delay to roadmap could lead to “a further rash of business closures”: IEA expert comments on ONS labour market figures15/06/2021 13:30:00
Professor Len Shackleton, Editorial and Research Fellow at free market think tank the Institute of Economic Affairs, commented on the labour market figures from the Office of National Statistics showing the unemployment rate has fallen to 4.7 per cent
“Chancellor right to reject calls for furlough extension”, says IEA expert15/06/2021 12:30:00
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, commented on calls to extend the furlough scheme
Civitas - Study finds over 80% CofE dioceses appoint clergy who advocate racial justice activist claims & over 70% promoting climate activism – marking Church’s ‘separation of the head from the body’10/06/2021 11:35:00
In a new report, researchers have set out to investigate the scale of support for ultra-progressive radical activist agendas alleging ‘systemic racism’ in English society, the understanding and use of ‘unconscious biases’ and prescribing a ‘climate emergency’ doctrine within the Church of England.
‘Special relationship’ can thrive if UK forges new green trade agenda with US at G7 summit – IPPR report10/06/2021 10:35:00
Ahead of the G7 leaders’ summit in Cornwall, the IPPR think tank is urging the UK to spearhead efforts to rewrite the rules of global trade.
IEA - “Social distancing rules must go on 21st June”: IEA expert responds to ONS data on UK pubs and bars sector10/06/2021 09:35:00
Christopher Snowdon, Head of Lifestyle Economics at free market think tank the Institute of Economic Affairs, responded to figures from the Office for National Statistics showing that 55 per cent of pub staff are still furloughed and only 24 per cent of pub owners have “high confidence” that their business will survive the next three months
‘Bitter irony’ that health and care staff are made ill by their work: The King’s Fund response to the Commons Committee report on workforce burnout and resilience08/06/2021 11:35:00
Suzie Bailey, Director of Leadership and Organisational Development at The King’s Fund, responded to the Health and Social Care Committee report on workforce burnout and resilience in the NHS and social care