We must use Brexit as an opportunity to reinvigorate British manufacturing

We must use Brexit as an opportunity to reinvigorate British manufacturing

I campaigned to leave the EU because it doesn’t work for the UK.  I believe the only logical objective of the EU is to become a single state and this has little chance of being achieved. Merging sovereign states has a poor record of success.

A trading group does not need a parliament, a single currency, a diplomatic corps, or a supreme court. However a single country does.

The EU adds more politicians, more costs and less flexibility. How can 27 diverse countries be harmonised under one regime? How can Greece and Germany share the same currency? It’s consistently performed poorly with poor decision-making processes.

However, the EU is not to blame for the UK’s economic underperformance, although the EU is certainly not the solution either (and in fact makes a solution more difficult).

To have a better economy, we need to produce more of the goods and services that we consume – products that are manufactured on an industrial scale. There are millions of people in the UK whose first choice would be to work in factories making the things we consume day in and day out. Unfortunately, many of them aren’t allowed to make a contribution because we buy goods from low-wage economies. We do get cheaper goods, but our balance of payments suffers, and we deal with that by borrowing money and selling assets. Not a sound idea.

Global free trade makes buying cheap goods from low-wage economies inevitable, but there is a price to pay in the longer term. Buying goods from overseas deprives those in the UK who would have made the goods from making a positive contribution to our economy. UK workers do cost more but the cash they earn remains in our economy and therefore we are collectively better off. UK manufacturing isn’t less efficient; it just pays higher wages. We should not protect inefficiency but we should protect our economy.

Global trade is unbalanced and causes financial bubbles. Of course it’s possible to cheat the laws of economics for a time, maybe even a long time. However, the bad news is that the economic birds will always come home to roost. There will be a bill to pay and the longer we leave it, the bigger the bill. The simple facts are that China and other countries are getting stronger and we’re getting weaker. We’re sleep-walking into another, probably more severe, financial crisis. We need to realise that increasing our debt to buy cheap goods from overseas is not to our long term benefit.

Having a more productive economy must be better overall. Manufacturing with UK labour has higher costs, but the money stays within our economy and makes us overall stronger and collectively better off. UK prices reflect UK costs. Earning UK wages means we can afford UK prices. The secret to our collective success is collectively being more productive – and this will determine our collective standard of living.

We keep talking about signing new trade agreements, yet we currently have very little to trade. We should be investing in the capacity to produce some of the stuff we import. It’s not glamorous, but it can easily be done and will make us stronger. We leave it to the market and it isn’t working for the UK overall. Government needs to get involved. If we don’t change, things will stay the same. The status quo is not working for most of us and isn’t even sustainable for those who are doing OK.

Recent Treasury forecasts claim that we will become poorer. The role of government is to act so this does not happen. And it’s not enough just to stop the decline; we need to grow and it’s the same solution: look at the resources we have today and how can these resources be harnessed to produce more goods and services – the goods and services that are in demand.

An economy does not become better off by raising pay. If pay were doubled tomorrow we would be no better off. If our output of useful goods and services increased, we’d be collectively better off. We need structural change, not fiddling at the edges. We need surgery not first aid. The prize for change is very high for all of us.