May sets out plan to boost post-Brexit economy

British PM Theresa May's vision for a state-boosted industrial renaissance will involve rebalancing the economy away from the services sector.
British PM Theresa May's vision for a state-boosted industrial renaissance will involve rebalancing the economy away from the services sector. PHOTO: REUTERS

British PM aims to reunite country by driving growth in rural areas as well as cities

LONDON • British Prime Minister Theresa May has outlined a bid to reshape the country's economy for a post-Brexit world, reviving the once unfashionable concept of industrial policy 30 years after former prime minister Margaret Thatcher killed it off.

Mrs May was to set out, yesterday, her vision for a state-boosted industrial renaissance as she chaired the first meeting of the Cabinet Committee on Economy and Industrial Strategy.

It brings together the heads of 11 ministries - half of her Cabinet including Chancellor Philip Hammond, Business and Energy Secretary Greg Clark, International Trade Secretary Liam Fox and Work and Pensions Secretary Damian Green.

Those not attending, said the BBC, included Foreign Secretary Boris Johnson and Brexit secretary David Davis.

"If we are to take advantages of the opportunities presented by Brexit, we need to have our whole economy firing," Mrs May said ahead of the meeting, in a statement released by her office.

"We also need a plan to drive growth up and down the country - from rural areas to our great cities."

After a referendum campaign that revealed dissatisfaction in many of Britain's struggling post-industrial regions, Mrs May is pitching a plan to reunite the country by raising the prospects of those whom she casts as "hard-working people".

The June 23 vote to leave the European Union has raised serious questions about the future of the world's fifth-largest economy, with some surveys indicating a recession, a hit to consumer confidence and a possible fall in investment.

"We need a proper industrial strategy that focuses on improving productivity, rewarding hard-working people with higher wages and creating more opportunities for young people so that, whatever their background, they go as far as their talents will take them," Mrs May said ahead of the meeting.

The challenge is to find a formula that arrests a decades-long decline in Britain's manufacturing sector by helping companies tackle the challenges posed by globalisation without making them uncompetitive.

She will make a priority of developing the industries already based in Britain - a push that could help car manufacturers like Jaguar Land Rover, GM-owned Vauxhall and Nissan, and aerospace industry leaders like BAE Systems to weather Brexit.

The strategy will also involve finding new ways to rebalance the economy away from its reliance on the services sector, and ensure wealth is distributed away from the prosperous south-east of England.

While policy detail was scarce, the strategy is likely to combine state-backed investment in traditional infrastructure like roads and rail with funding for modern essentials such as broadband and lower energy costs, along with a push to train more of the highly-skilled workers that industry says it needs.

Mrs May's office said the strategy would promote a range of industrial sectors with a focus on addressing long-term productivity growth, encouraging innovation and focusing on the industries and technologies that give Britain a competitive advantage.

The refocusing of Britain's economic policy - for the last six years aimed at balancing the books and heavily reliant on foreign money to replace state infrastructure spending - also carries a potentially huge political prize.

With the opposition Labour Party, long seen as the champion of the working classes, locked in a vicious internal ideological struggle and losing sway in their traditional heartlands, Mrs May has an opportunity to win over those who saw voting "Leave" in the EU referendum as a "nothing to lose" protest vote.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on August 03, 2016, with the headline 'May sets out plan to boost post-Brexit economy'. Print Edition | Subscribe