Opinion: Brexit success vital for ‘grand challenges’

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Adam McGiveron, head of Brexit and advanced manufacturing at Shakespeare Martineau says that the ‘grand challenges’ of the Government’s industrial strategy can’t happen without Brexit negotiation success.

 The new Industrial Strategy Policy is a hefty document. It weighs in at 255 pages and sets out specific priorities backed up by consultation and expert evidence. The Government’s Brexit white paper was a much thinner affair. It took up just 77 pages. It was short on detail and little clarification has emerged since publication.

The Industrial Strategy contains lots of good ideas and has been generally well received. The five foundations of ideas, people, infrastructure, business environment and places are coherent and reflect the needs of business and the UK economy. There is a good balance between playing to our regional strengths whilst avoiding the temptation of previous government strategies to “pick winners”.

Sadly, unless we have some clarity on where the Government is taking us with Brexit, businesses will not get the chance to convert any of those ideas into reality.

The cornerstone of the strategy is rightly to improve the UK’s productivity which has remained weak since the financial crisis in 2008. Improving productivity requires investment: both in people and equipment.

The Government’s erratic approach to Brexit negotiations and the lack of meaningful dialogue with business is seriously hampering investment. Whilst the last 12 months have seen a few headline grabbing investments, those of us advising a wide range of businesses have seen a steady stream of postponed investments, economic bad news and worried businesses. This is not conducive to long-term planning.

The investment in people and skills is essential to the long-term future of the economy. Unfortunately, there is a serious skills gap in the here and now. Many businesses in all sectors have for the last couple of decades relied on importing skilled and semi-skilled labour. This helped cover the gap whilst businesses waited for a coherent Government strategy that would provide them with sufficient home-grown talent.

Since the Brexit negotiations began, many businesses have found it harder to retain, and almost impossible to attract, the right skills; and this is damaging their businesses.

Investment in equipment often relies on importing capital items. The weakness of sterling after the Brexit vote has made these imports much more expensive. This too is hampering productivity growth.Most of all, businesses need to know that there will be markets for their goods and services. International competition is relentless, and margins can be very tight. One thing UK business really does not need right now is to be hampered by the tariffs and administration that would follow from poor trade deals with the EU and our other international trading partners.

Businesses need a coherent policy framework and the Industrial Strategy is a good starting point for the current and future needs of our economy. The management of Brexit has not been clear so far and risks creating problems that are too big for a clever industrial strategy to solve.

Adam McGiveron, head of Brexit and advanced manufacturing at Shakespeare Martineau.

www.shma.co.uk

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