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They Brexit, they own it… July 19, 2016

Posted by WorldbyStorm in Uncategorized.
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Useful piece in the Observer by Greg Clark at the weekend about how Brexit at least means the reintroduction of an industrial strategy in the UK. The problem is, as the paper notes, that:

Talking about an industrial strategy is not, of course, the same as actually delivering one. And such has been the relentless hollowing out of manufacturing over the past four decades that it will take time and patience for a new approach to bear fruit.

How long would that be then? A decade. Two? Because that’s the sort of timelines one is talking about in relation to revitalising industries that have suffered that and that long again in terms of marginalization. there’s worse too, it’s not as if the world has stood still in the interim. Thinking logically about what sectors of British industry could compete against not merely long and well embedded EU centres of same, funded by governments who whatever their stripe appear never to have forgotten that services and services alone are insufficient to sustain economic progress and growth, but also China and other international centers whose labour costs are lower again and one has to wonder if this is a boat that the UK missed in the 1970s.

And underlying that is the question just why did the UK join the EU in that decade. It surely wasn’t because of the stellar performance of its economy. Anything but. In a way this may underpin just why the relationship was so bad because joining was in part due to a recognition matters were going from bad to worse.

Subsequently that focus on services made sense, as part of a broader economic area it could afford to carve out a specialised niche in a way that as a standalone economy it simply cannot. Or at least not in the short to medium term.

Even reading the Clark’s proscriptions it is clear that there is more than an element of reinventing the wheel about what is suggested next:

It is pretty clear what needs to be done. Clark should, as Mandelson did, seek to ensure that the UK competes in the growth industries of the future, such as green tech, genomics and robotics. He needs to import the German model of long-term finance. His department should be looking to the US to see how ideas can be spun off from universities and commercialised. The tendency of the private sector to hoard cash provides a strong case for a national investment bank.

But again, while those all make sense the problem is that there are those who are already in place. That German model is a clue in that respect. Moreover, and Clark implicitly notes this. All this should be in spite of, not because of, Brexit:

The chances of all this being achieved in this parliament are remote. It may be that the government’s attention will be so taken up with Brexit that it won’t have the bandwidth to flesh out a meaningful new approach. There might be a brain drain of officials to the Brexit department; Clark might prove to be not up to the job; the Treasury might stamp all over the new philosophy if it starts to look too threatening.

And there’s another problem. This is, whatever its pretensions, a pretty right-wing Tory administration. Are they genuinely wedded to this ideologically? After all, Brexit and the Leave campaign in its largest elements were open about their support for essentially right-libertarian and laissez faire approaches.

Comments»

1. FergusD - July 19, 2016

British capitalism has been wedded to financial services for far too long to turn this around easily, if at all. Tony Norfield argues the UK economy has been reliant on the financial sector for many decades. They won’t abandon that focus lightly, well they just won’t. Financial capital and industrial capital are intertwined and industrial capital is happy with that.

https://www.versobooks.com/books/2103-the-city

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WorldbyStorm - July 19, 2016

I think what you say makes good sense,be interesting to see how they square these circles.

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2. Gewerkschaftler - July 19, 2016

Great title – may I steal it?

Or did you, WBS🙂 ??

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WorldbyStorm - July 19, 2016

I thought it up and went looking, you brexit you own it is one alternative but I don’t think this one was. Only a matter of time.

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3. John Connor - July 19, 2016

I don’t see how the circles can be squared – if the City is to be protected post-Brexit (and that will be a major policy aim, as it always has been) and good access to the Single Market provided (the UK sends 40% or so of its exports to the EU, the EU sends 10% of its exports to the UK), freedom of movement will have to be conceded in some way.

No matter how good the deal is, there have to be some disadvantages to prove leaving the club is not a good idea.

It’s the Norwegian option, I’d say – free movement plus good access to the Single Market – a gloss will be put on it: it won’t say Norwegian option on the cover and it will be presented as an “interim” step.

A humiliation of some must be in prospect – how are they going to explain the climb down to the voters who thought it was all about straight bananas?

J

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WorldbyStorm - July 19, 2016

yeah, that makes sense. Be interesting to see how Fox and Davis and Johnson, though perhaps not so much the latter, feel about it. Davis in particular has spoken utter rubbish about what is feasible.

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gendjinn - July 19, 2016

I’d be concerned that Tories are more focused on re-election than the best deal for the country. Freedom of movement will antagonise the UKIP/nativist vote that gave the Tories victory in the last GE.

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