Industrial Strategy: Will It Be Enough?

The government will today publish its much trumpeted Industrial Strategy. It is desperately needed because of Brexit, whatever the outcome. Just as any country opting to go to war with a clapped out military is heading for defeat, so one about to embark on the biggest legal, administrative and economic re-positioning in its history, without the foundation of a vibrant and growing economy, is heading into at best decline and at worst disaster.

Having heard a bit of chitchat on the media about what is coming from those who know and some who clearly don’t, it seems a good idea to restate this Blog’s view of what is required. This is a massive reboot of the economy, transforming it from asset inflation to new wealth creation. That will require dynamic quantitative easing by the Treasury to fund a huge investment programme in leading edge technology, R& D, infrastructure, energy and communications, new industrial development and a massive skills upgrade of the workforce. The amount of government investment over five years of this new money, must equal the sum pumped into the financial sector by the Bank of England. That is £435 billion. Anything less will not be enough to do the job properly.

If it is done properly it will indeed achieve the great economic leap forward about which politicians have talked for so long, but proved unable to deliver. If the new strategy is no more than a bit of this and that, lofty rhetoric and scarce money, then it is backwards all the way for keeps. Because the failure of the original Osborne blueprint to balance the books by 2015 and set the economy growing on a foundation of new wealth creation (remember the March of the makers?) rather than asset inflation, has trapped the economy in a spiral of rising debt and falling living standards with austerity as a way of life.  We are on the very threshold of  a condition of economic decline which is chronic.

Chronic conditions are incurable. The last time we took ourselves to the brink, we recovered by joining the Common Market. Brexiteers believe this time we will recover by reversing the process and leaving the EU. The snag is that they are unable to tell us, specifically, how.