For the first time in decades, Britain unveiled a 131-pages master industrial policy plan on Monday.
Margaret Thatcher eradicated the concept of an industrial policy in the name of laissez-faire economics in the early 1980s, but Theresa May is now reintroducing government intervention as part of a post-Brexit vision.
Amidst a chronic productivity crisis that predates Brexit, slowing growth as a result of Brexit, divestment, surging inflation, and declining real income, Theresa May’s government is pitching a new policy vision that entails government intervention. The policy is compared to Asian precedents – Taiwan, Japan, China – but, in fact, resembles the German and French “national champions” policy model.
The strategy announced is the result of a year-long consultation with business stakeholders. London is returning to an industrial policy complete with government funding for infrastructure, training, and research.
The emphasis will be in emerging strategic industries, including biotechnology, Artificial Intelligence, battery and robotics technologies. According to the Business Secretary Greg Clark, the government is prepared to invest €850,000 in matching funds for innovation programmes research, in addition to the €1,2bn already committed via a strategic technologies fund.
Whilst betting on winners, the UK will also invest on transport, housing, and digital infrastructure to the tune of just under €35bn. That infrastructure will be designed to boost sustainable development, mobility and ageing society challenges.
In a synchronized moved that did not appear accidental, the US pharmaceuticals multinational MSD announced an expansion of investment in biotechnology in London. The company will built a new innovation center by 2020, adding 150 new research jobs to its 800-strong workforce, the Financial Times report.
That follows on a strong tradition of strategic investment from the US in British biotechnology, including the partnership between Google and GlaxoSmithKline for the development of bioelectronic medicines.
Moreover, the German diagnostics company Oiagen committed to building a research campus in Manchester, adding 800 research jobs, even as the European Medicines Agency leaves the UK for Amsterdam.
The announcement of an industrial policy is timely for reasons other than Brexit. Not only real income is dropping – despite record low unemployment – but productivity and growth projections have been revised downwards. According to the IMF, the UK economy is projected to grow by 1,5% in 2018, down from a 2% projection.