“A huge vote of confidence,” is how the Government, with no false modesty, described an investment of up to £1bn by MSD (Merck in the US) in a UK research centre, the launch of which was timed to coincide with its post-Brexit economy plan.
Ministers are desperately keen to trumpet this sort of thing. Those not part of the Gove / Johnson politbureau are rightly nervous about what’s going to happen when the hammer comes down.
Stumbledore Liam Fox can witter on about waving his wand and signing trade deals, but if the weekend rumblings from Australia are anything to go by – it treated his ideas with the sort of disdain with which its cricketeers treated England’s bowlers – then they won’t be able to rely on him for help.
The problem with announcements like the one from MSD/Merck, and those we’ve seen from the likes of Facebook and Google, is that for every one of them there’s at least one, or two or three, big investments being cancelled.
A rare public example of that came over the weekend with The Daily Telegraph reporting on the cancellation of plans for a research centre from another company operating in the healthcare sector, Johnson & Johnson. The reason? Economic uncertainty, created by that newspaper’s beloved Brexit.
There are many more like that, however, that we will never hear about. Governments and businesses are much less likely to report on what they’re not doing than what they are.
Lots of businesses are sitting on their hands right now. Still more are putting contingency plans in place to shift jobs and investment away from this country.
Business investment crawled up by just 0.2 per cent in the last quarter, the weakest since the end of last year, which tells you all you need to know. Businesses don’t want to spend money in the absence of any real idea of what’s going to confront them in just over a year’s time.
The Government’s plan is supposed to address that. Brexit may be the bastard child of nostalgic Thatcherites, but its result has been the slaughter of one of their sacred cows: the view that the state should not intervene in industry and instead leave the market to its own devices.
To draw in companies like Merck, and multinational operators in other industries that ministers think the UK is good at – AI, for example, as well as healthcare / pharmaceuticals – it plans to shower taxpayers’ cash upon them.
Critics of this approach, and there are plenty, will lament this as an attempt to pick winners (no, no, we’re boosting excellence!) while highlighting the UK’s dreadful past record on that front.
But their laissez faire approach has left us with deep economic problems, such as an overly dominant financial services sector that powers London and the South-east while much of the rest of the country shivers.
A more balanced economy, which might have resulted had previous governments attempted to address this problem earlier, would probably have led to a more balanced country, one more at ease with itself and less prone to the lies of populist, self interested Brexiteers.
Unfortunately, this Government has woken up to the problem and performed a volte face in the midst of a crisis, with much of the City preparing to flee, taking a big chunk of the £70bn-plus in annual tax revenues it contributes with it.
Policymaking in the midst of a crisis rarely good policymaking. As for where the funding for its interventionist plans is going to come from long term? Answers on a postcard, please.
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