At the end of January we finally got sight of the government’s industrial strategy green paper. As we said a few weeks ago, this wasn’t the big reveal on a blueprint for the UK economy but the start of a process of consultation on how a long term strategy for industry should start shaping up.
The paper sets out 10 policy pillars which are, in effect, the priority areas for policy to support economic growth, productivity and prosperity in every corner of the UK. It outlines action already underway by government departments under these headings and, crucially for EEF, it asks A LOT of questions about what else government should be doing to bring industrial strategy to life.
And over the consultation period we'll be asking some questions of manufacturers too.
As regular readers will know we’ve been talking about industrial strategy – the need for one, what it should contain etc.. – for a while. And EEF members have supported our policy development in this area by responding to our survey requests and giving us feedback at regional meetings.
Still, if your business hasn’t told us (or government) what you think, then over the next couple of months we’ll be summarising the key pillars of the green paper, asking for your input and feeding our thoughts into the consultation process as we go.
So first up this blog will set out some of our thinking on the appropriateness or otherwise of the ten pillars and then drill down into the meat of one – ‘Encouraging trade and inward investment’.
The right stuff
We’ve previously proposed that industrial strategy answer the questions – why have one, what are the priority actions from government, how should these be implemented???
So, at first glance the green paper has all of our policy priority bases covered. However, some are covered more comprehensively than others. The importance of a competitiveness cost base is only really covered in the affordable energy section – but credit for putting the words affordable and energy together in the first place.
Secondly, industrial strategy can only be a strategy if the importance of developing skills is clearly and transparently joined up with decisions on future regulations governing the world of work and employment.
So, in summary the majority of the pillars feel to us like the right areas of focus over the long term and with a focus on shifting productivity and growth outcomes. Joining this up across institutions – whether they be Whitehall based or regional is mission critical for the strategy to address co-ordination problems across government. A more consistent, nay, explicit focus on a competitive cost base would provide good underpinning foundations for industrial strategy.
But what do you think? Is government taking action in the areas that reduce barriers to growth or expansion in your business?
Trade and investment – please, businesses, can we have some more?
Exporting is GREAT. It’s clear that the government’s intention is for the road from Brexit to put us centre stage in global trade. The strategy outlines a whole host of to dos for government to help make this happen:
The problems the analysis highlights is the relatively low proportion of companies exporting in the UK and the weak rate of growth in exports as a share of GDP compared with most other G7 nations. One might also observe that targeting a particular value of exports has fallen out of favour in this strategy.
If the aim is to catch up with the G7 pack and ensure UK businesses are well place to succeed in a post-Brexit trading environment, it’s a pretty good list of actions. There are a couple of omissions that jump out.
Firstly, what’s the role of overseas embassies and consulates in this new world – their support is highly regarded by manufacturers entering new export markets.
A possible second issue is the fuzzier outlook for global trade growth. It’s persistently fallen short of expectations in recent years with changes to the structure of global value chains, protectionism and the availability of trade finance all potentially in the frame. The jury’s out on whether this downward shift in trade growth globally is structural or cyclical. A good strategy should identify the potential downsides as well as the opportunities.
You tell us – experienced exporter or making your fist move overseas – what would make a difference to your success?
You can tell us what you think by email: email@example.com or the twitter: @EEF_Economists