The stark contrast between Britain’s dwindling manufacturing sector and China’s industrial prowess has never been more evident. Following Keir Starmer’s recent visit to China, the Labour leader faces a critical opportunity to reinvent the UK’s economic landscape. The key takeaway? A robust manufacturing base is essential for Britain’s prosperity, and the path to revitalisation will be challenging yet necessary.
A Shift in Economic Power
In the late 1970s, both Margaret Thatcher and Deng Xiaoping embarked on transformative economic journeys. Thatcher aimed to bolster capitalism within Britain, while Deng initiated sweeping reforms that would elevate China from a largely agrarian society to an industrial titan. Today, the roles have reversed, with China now a leader in electric vehicles and artificial intelligence, and the UK struggling to maintain its manufacturing identity, which now constitutes a mere 8% of GDP.
Starmer’s observations during his trip underscore an uncomfortable truth: while Britain has embraced a service-oriented economy, China has retained its commitment to manufacturing. The disparity raises pressing questions about the sustainability of the UK’s current economic model. With services representing 80% of the UK economy, reliance on this sector alone has led to stagnation, particularly in productivity since the 2008 financial crisis.
The Case for Rebuilding Manufacturing
The first lesson from Starmer’s interactions in China is clear: manufacturing must be prioritised. A thriving industrial sector is not merely about fostering high-paid knowledge workers; it is about creating a balanced economy that can withstand global disruptions, as seen during the COVID-19 pandemic. The UK’s current trade deficit in goods, which has persisted since the 1980s, highlights the risks of over-reliance on imports.
Despite decades of decline, there remains hope for Britain’s industrial future. The country is rich in untapped talent and resources, as evidenced by Denmark’s successful wind-turbine industry. The belief that manufacturing is a lost cause is overly pessimistic. A concerted effort can yield results, and a realistic goal of increasing manufacturing’s share of GDP from 8% to 10% is achievable with the right strategy.
Strategies for Success
However, rejuvenating the manufacturing sector will demand a monumental shift in approach. It is unlikely that the UK will return to being the “workshop of the world.” Instead, a more modest ambition requires a coherent and sustained industrial strategy, ideally supported by a dedicated economic ministry capable of navigating political and financial obstacles. Investment—both public and private—will be crucial.
Challenges abound: how can new UK manufacturers compete against established foreign firms? For instance, the electric vehicle market is dominated by cheaper Chinese models. Government intervention will be vital. Implementing measures such as domestic content requirements, “buy British” procurement policies, and subsidies akin to those introduced in the US could provide the necessary support for fledgling industries.
Rethinking Economic Perspective
To break free from its post-industrial malaise, Britain must adopt a mindset typically associated with developing economies. Even as China flourishes, it continues to actively support its industries through strategic policies. The UK should not shy away from similar tactics, which could include tax incentives and tariffs to protect and nurture its manufacturing base.
In this new economic landscape, the UK can learn from its competitors, recognising that a proactive approach to industry support is crucial for long-term sustainability.
Why it Matters
The revitalisation of Britain’s manufacturing sector is not just an economic necessity; it is a matter of national resilience. A balanced economy that includes a strong manufacturing base can weather global challenges, reduce dependency on imports, and foster innovation. By embracing a model that prioritises industrial growth, Britain stands a chance to reclaim its position as a significant player on the global stage, ensuring prosperity for future generations.
