They don\’t really mix, do they, Seamus Milne and economics?
That\’s what makes Mandelson\’s sudden conversion to industrial policy – anathema under the New Labour ancien regime – all the more emblematic. The new business secretary\’s commitment to "industrial activism" to support low-carbon, hi-tech manufacturing, spelled out last night in his Hugo Young memorial lecture, is potentially almost as significant a turn as the nationalisation of Northern Rock. This is a politician, after all, who almost embodied corporate "light touch regulation" in his earlier incarnation. But with engineering employers warning of a wave of manufacturing bankruptcies "within days or weeks" without state support and the prospect of three million unemployed by the end of next year, such dogmas have become a luxury.
Naturally the move is dressed up in all-purpose New Labour-speak about "what works" and will undoubtedly be nothing like as ambitious as French president Nicolas Sarkozy\’s new €20bn state investment fund, complete with public equity stakes in strategic companies and industries.
It ain\’t manufacturing that\’s going to crater this time around. It\’s services.
You might have noticed that the pound has fallen a tad here and there. That\’s going to boost manufacturing all on its very own. Manufactured imports will become more expensive to us and our exports to others become cheaper to them. Because we have a floating currency (ie, we\’re not inside the disastrous euro) we\’ve already done pretty much what is necessary to set off a boom in manufacturing. We just don\’t need to start spraying taxpayers\’ cash all over "strategic companies and industries".