PM May Revives Industrial Policy as Britain Prepares for Brexit, According to Reuters

By William James

LONDON – On Tuesday, Prime Minister Theresa May will present her plan to transform the British economy in the wake of Brexit, reviving the concept of industrial policy that has been out of favor since the days of Margaret Thatcher three decades ago.

May will lead the inaugural meeting of the "Cabinet Committee on Economy and Industrial Strategy" from her offices in Downing Street. This gathering will include the heads of 11 other ministries to outline her vision for a robust industrial revival supported by the state.

In a statement released prior to the meeting, May emphasized the need for the economy to fully capitalize on the opportunities presented by Brexit. "If we are to take advantage of the opportunities presented by Brexit, we need our whole economy firing," she stated. "We also need a plan to drive growth across the entire country— from rural areas to our major cities."

Following a referendum campaign that highlighted dissatisfaction in many of Britain’s struggling post-industrial regions, May aims to present a strategy that unifies the nation by improving prospects for what she terms "hard-working people."

The June 23 vote to leave the European Union has raised significant concerns about the future of the world’s fifth-largest economy, with several surveys suggesting an impending recession, a decline in consumer confidence, and potential drops in investment.

"We need a proper industrial strategy that focuses on boosting productivity, rewarding hard-working individuals with higher wages, and creating more opportunities for young people," May stated, asserting that talent should determine progression, regardless of background.

Her challenge involves finding a solution to reverse the long-term decline of Britain’s manufacturing sector, aiding companies in addressing globalization challenges while preserving the competitive advantages that market forces provide.

May will prioritize supporting existing industries in the UK, which could assist automotive manufacturers like Jaguar Land Rover, GM-owned Vauxhall, and Nissan, along with aerospace leaders like BAE Systems, as they navigate the uncertainties of Brexit.

Additionally, her strategy will seek to diversify the economy beyond its heavy reliance on the services sector and ensure wealth distribution extends beyond the affluent southeast of England.

Though specific policy details remain unclear, the approach is expected to combine government-backed investments in traditional infrastructure—such as roads and rail—with funding for essential modern needs like broadband access and lower energy costs, alongside initiatives to train a skilled workforce that industry demands.

Industrial policy in Britain has a troubled history; past efforts in the 1960s and 70s to save failing industries through misguided policies have left a lasting negative impression. However, an anonymous government source commented, "We’re not getting into the business of picking winners; it’s more about creating the right environment."

According to May’s office, the strategy will aim to boost various industrial sectors, focusing on sustainable productivity growth, encouraging innovation, and spotlighting industries and technologies that provide a competitive edge for the UK.

Recently, May surprised stakeholders by deciding to review plans for the construction of Britain’s first new nuclear plant in decades, signaling a shift in the country’s economic policy.

With the opposition Labour Party, traditionally viewed as the voice of the working class, embroiled in internal conflicts and diminishing influence in their strongholds, May has an opportunity to win over voters who supported the ‘Leave’ campaign as a means of expressing dissatisfaction.

"The Brexit vote and euroscepticism were most pronounced in former manufacturing regions, where industries and quality job opportunities have vanished, leaving people feeling marginalized," stated David Bailey, a Professor of Industry at Aston Business School.

"If May’s going to reconnect with these communities, manufacturing has to be a crucial part of the narrative."