How will industry flourish post Brexit?

Brexit Insights
By David Wood, Executive Director, Policy Leadership and James Barbour, Director, Policy Leadership

30 January 2017

The Prime Minister has launched proposals for a new modern industrial strategy for the UK

The background of Brexit and relatively low productivity levels requires us to reassess what are the UK’s comparative advantages and how we can maximise our global competitiveness in a post-Brexit business world.

In setting out her vision, Theresa May also highlighted that the result of last summer’s referendum was more than just a decision to leave the EU but also the public demanding a change to the way that the UK works - to look beyond “short-term thinking to focus on the big decisions that will deliver long-term, sustainable success” – “and … to build a brighter future for all.”

The PM should be praised for her vision but ultimately as with any strategy, success or failure depends on its implementation.

Ten strategic pillars

The strategy comprises ten key strategic pillars. The UK starts from what appears to be a relatively strong base, being the fifth largest economy in the world with current low levels of unemployment. However, there are concerns about productivity levels and questions can be asked about the quality of jobs in which many are employed, reflecting the use of zero hour contracts and “gig economy” type jobs.  

How will austerity and the current high level of UK Government debt – somewhere in the region of £1.7 trillion – allow the levels of investment which the Government wants?

It is hard to argue with the ten strategic pillars. Each of these in its own way is crucial to the future success of the UK economy. The question that should be asked is: what will we be doing that we are not doing at present and will greater Government intervention really be a catalyst to increased growth.?

A strategy that works for all the UK

It could be argued that the devolved nature of the UK makes it harder to introduce a centralised industrial strategy that serves the whole of the nation.

The Government is at pains to highlight that it seeks to use the decentralisation of power and accountability as a means to seek to spread the economic success of the south east of England to other regions of the UK. So the application of aspects of the Industrial Strategy to the devolved nations will depend on whether Westminster can encourage a joined up approach or whether the devolved administrations will pursue a different policy. Many of the proposals are not new but merely repackaging of previous policies – but there are some interesting, if sometimes vague, new commitments.

An outward-looking vision

It is heartening to see a vision that is not protectionist but outward looking and seeking to maintain and enhance the UK’s standing in the world economy.

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