Emerging industries have grown vastly in recent years, pushing the UK to the fore of future growth. We are storming ahead in non-animal technologies, in quantum technologies, and in graphene research. Concurrently, emerging industries are becoming more important to our own economy. Photonics are now worth £12.9bn to the UK and the industry employs more than 70,000 people. Meanwhile, the space industry brings £13.7bn to the economy and is indirectly responsible for £250bn of GDP. The sector employs 38,000 people.
Despite emerging potential, traditional industries remain the backbone of our economy. Yet, they are facing significant challenges. Construction dipped into, then recovered from, a technical recession late in 2017, and optimism fell to its lowest in nearly five years. The services sector is growing steadily, but is still yet to find answers to lagging productivity levels, which are – most worryingly – lowest in sectors with the highest employment shares. These challenges run parallel to entrenched regional disparity, and continued public pessimism about the general economy.
These challenges can be met by a shift in economic focus: away from traditional industries, and towards emerging ones. The up-and-coming sectors tend to be more productive, and attract more investment, though not only in London. In 2016, nearly 70% of total UK digital tech investment was beyond the capital city. Similarly, employment in these sectors is regionally diverse. The Hartree Centre, at the forefront of energy efficient computing and backed by £170m of Government funding, is based just outside of Liverpool. Also, 74% of employment in the UK’s space industry is outside of London. It is difficult to see how more skilled jobs, paying high wages, in advanced and innovative industries, could not improve economic optimism.
Government help can realise this crucial shift. In 2014, the Government released the Emerging technologies & industries strategy; it outlined plans for simple investment into the UK’s fastest up-and-coming sectors. However, there is more that can be done. The Japanese post-war industrial model offers an insight into effecting a rapid change in economic focus. Heavily subsidised loans, R&D subsidies, special tax treatment, and import protections, were all significant in strengthening emerging industries after the Second World War. In addition, the Government offered aid to firms in declining industries, who would have collapsed without important structural changes. The Japanese economy moved from a dependency on heavy industry to a focus on high-tech industries in around 20 years.
Through unreserved and liberating industrial policy, we must aim to lead in, and push the boundaries of, our emerging industries. The industrial policy white paper last year, and the emerging technologies strategy, do not go far enough. The new strategy cannot simply be investment based. We must vastly reform all aspects of economic policy, completely realigning the economy to the future. It is certainly possible, because it is politically palatable. The strategy would garner wide support, and much of the research has been conducted in the Northern Powerhouse project. It could help to define this Government’s economic policy, and deliver the exciting promises the Prime Minister made when she first spoke at Downing Street. Most importantly, it is cohesive with Conservative values; ambition, optimism, and a desire for our country to be the best it can be.
At the precipice of a different economy, with bubbling future industries, our United Kingdom should leap forward with the optimism it has often denied itself. Not only to build a country fit for the future, but a future that is fit for this country.
Max Jeffery is a second year student at Durham University, studying Politics, Economics, Classics, and English Literature. The views expressed in this article are those of the author, not necessarily those of Bright Blue.
