Britain is to adopt an interventionist approach to balancing its heavily services-based economy for the post-Brexit era, aiming to reinvigorate industrial production and stimulate investment in technology and R&D.
Unveiling her long-awaited ‘Modern Industrial Strategy’ yesterday, Prime Minister Theresa May demanded closer collaboration within key industries in exchange for government support on regulation, trade and research.
The focus on industry and the shift to a governmental hands-on approach challenges the traditional Conservative 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, and enabled aerospace firms such as BAE Systems 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 could be used to increase exports, and support the creation of new institutions to provide leadership, drive innovation or boost skills.
“The modern industrial strategy will back Britain for the long term: creating the conditions where successful businesses can emerge and grow, and backing them to invest in the long-term future of our country,” May said in an e-mailed statement prior to the announcement.
Impending exit from the EU threatens to undermine the financial services sector
The outline of the strategy was set out in a ‘Green Paper’ consultation document, seeking input from industry.
“Today’s Green Paper signals a more ambitious approach to securing growth and preparing for the inevitable pressures that will accompany Brexit,” said Paul Everitt CEO of the aerospace trade body ADS.
The government also listed 10 strategic pillars behind its strategy such as skills development and improved procurement.
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.
It comes as 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 ‘Hard Brexit’.
“The idea that the government can have any reasonable strategy for British industry while recklessly withdrawing from the single market is laughable,” said Don Foster, business spokesman for the rival and pro-EU Liberal Democrat party.
“It’s like the manager tying their team’s bootlaces together while telling them they have a plan to win the match.”
Under the banner of building an economy that distributes wealth more evenly, following decades of industrial decay in parts of Britain, the plan seeks to protect the economy from the risk of leaving the EU and address a mood of disenfranchisement that drove many voters to back Brexit.
The government said early work had been done on sector 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.”