5 - Industrial policy

Summary

Industrial policy was a key issue in debates leading up to and following the EU referendum. The 2007 GFC and its aftermath exacerbated stark disparities in the UK, which had been widening since the 1970s. The decline of mining, steel, shipbuilding and other manufacturing industries in the central and northern regions of Britain since the 1970s proceeded in parallel with the ongoing concentration of wealth in the City of London (see Chapter 7). Inner London is among the wealthiest regions in the EU, while as many as nine British regions are among the relatively poorest in Europe and the absolute poorest among other northern European industrial countries. By 2017, the UK recorded by far the largest gap between domestic regions as measured in GDP per capita. Inner London was over six times the EU average, with Luxembourg in second place at just two and a half times that average. Almost every region outside of the southeast was below, and in many cases well below, the EU mean. Notably, this EU average included the post-2004 central and eastern European accession countries (Eurostat 2019). At the same time, many wealthy EU states, in contrast, had registered declining regional inequality, even though the gaps between their richest regions and the poorest parts of the southern periphery (and the British periphery) had widened (see MacKinnon 2017).

The period of austerity following the 2008 GFC, and the election of the Cameron‒Clegg coalition government in 2010, with its subsequent pursuit of a radical austerity agenda, drastically exacerbated these inequalities. The 2010 coalition government invested less in public services, including the NHS, and infrastructure, including public transport links. They cut social support just as many citizens and their communities, reeling from the aftermath of the financial crisis, required further government assistance. The meagre economic growth that recommenced once the initial period of austerity abated did little to assuage this situation, and actually reinforced Britain's dysfunctional pre-crisis development model (see Berry 2013; Chapter 7). Brexit arose in this specific, even peculiar, context.