Brexit: an opportunity for industrial regeneration

Jeevan Vipinachandran

Night, industry, rails (

Night, industry, rails (

The decision of the people of the UK to leave the European Union was somewhat unexpected and wholly transformative, one way or another. Political circumstances, including the scale of the democratic mandate, dictates that there can be no backsliding from ‘’Brexit’’. The challenge is instead to establish the path forward to make it work, particularly as those campaigning for Brexit appear not to have had a coherent, unified plan.  Making the economy open and competitive to restore economic growth will be challenging, but it can be done. It requires the development of a new flexible, rebalanced economy where the real powerhouse of growth is as much northern industry as it is southern services.  This could modernise important aspects of the political economy of the UK going forward, meeting the twin challenges of economic deprivation and social division which the referendum shone a light on.

Some would argue that the ship of industrialisation sailed a long time ago. Evidence now tells us that this has not been the case, as the impressive experience of East Asia, India and others show. China has boomed and India is also beginning to grow faster thanks, in part, to a spurt in manufacturing investment. Sceptics could point out that the UK is not China and India. In fact it is not. This country is a fully developed liberal democracy with respect for intellectual property rights. This is an advantage that even the latter two still do not have to differing degrees.  The UK enjoys the full spectrum of the rule of law, including respect for intellectual property rights and strong daily law and order. It also has first rate infrastructure, soon to be upgraded by a new generation of transport links such as HS2. This will help make it easier to import materials as well as to help move prospective workers around the key industrial regions of the UK – easing development and social mobility.

One of the key drivers and underlying challenges of Brexit is the so-called north-south divide, the economic and social cleavages which divide northern working class areas from southern metropolitan ones. It was partly in political revolt against the values of people from southern metropolitan areas that many working class people in poorer northern areas, such as Sunderland, chose to leave the EU. The feeling among some was that mass immigration from EU Member states was not beneficial. The perception that immigration was actively squeezing jobs and services is an opinion which severely hurt the case for staying in the EU. Making people in northern England feel integrated requires constructive political engagement with them. The alternative is that the political space in these geographical areas becomes dominated by individuals and organisations of a populist political persuasion, which is not good for social cohesion or economic development of the country as a whole.

Practically, effecting this substantial economic change for the better requires leveraging existing UK strengths in infrastructure , while developing a more sophisticated workforce through reskilling and education reform. It will encourage industry to return, especially as Prime Ministers from Margaret Thatcher to David Cameron failed to develop a cogent and viable industrial policy which could be beneficial for the areas outside of the metropolitan, services led South and greater London area. The advantages of aspects such as the falling pound then become clear in this context – it enables the UK to build an export centric recovery from the challenges of Brexit. A weaker pound can help UK manufacturers to take full advantage of the rapidly growing need for modern manufactured goods from nations around the Commonwealth, especially those in Asia.

The whole UK economy was imbalanced and arguably ignored the aspirations of people living in the north of the country. This is an opportunity to rebalance the economy and integrate the country socially as well as economically. The last great challenge is to manage the foreign policy and security relationships of the country in an unstable post-EU (but not post European) world. This is where foreign policy comes in in many ways. The outreach of people like David Davis MP – recently made Brexit minister by Prime Minister Theresa May- is crucial here. There are glimmers of hope for Britain going forward in a post Brexit environment. Australia has sounded Great Britain out about negotiating a new free trade deal. This is encouraging news. Britain as a trading nation pre-existed the EU. There is no reason it cannot become one for a second time in a technology driven age.

In short Brexit does not necessarily have to be a negative process. In carrying out the will of the people to leave the EU, Great Britain can actually gain a new lease of life. It can rebalance its economy and develop its bilateral relationships to gain maximum benefit from the opportunities that Brexit has actually made possible.

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