{"id":8518,"date":"2019-05-29T07:51:40","date_gmt":"2019-05-29T07:51:40","guid":{"rendered":"https:\/\/sceptical.scot\/staging\/?p=8518"},"modified":"2019-05-29T07:51:51","modified_gmt":"2019-05-29T07:51:51","slug":"an-industrial-strategy-for-europe","status":"publish","type":"post","link":"https:\/\/sceptical.scot\/staging\/2019\/05\/an-industrial-strategy-for-europe\/","title":{"rendered":"An industrial strategy for Europe"},"content":{"rendered":"\n

The proposed merger between car-makers Fiat-Chrysler and Renault highlights what is likely to be a growing trend in Europe over the next five years: devising and implementing an EU-wide industrial policy to take on the twin challenge of American and Chinese striving for corporate hegemony.<\/strong><\/p>\n\n\n\n

Industrial policy in the UK in recent years has been little\nmore than tokenism on the part of Conservative chancellors, George Osborne or\nPhilip Hammond, towards the (de-industrialised) north (of England). It is still\nwidely derided among orthodox politicians and economists as \u201cpicking winners\u201d. But\nin mainland Europe it is making a strong comeback after a series of\nintermittent attempts to revive it. It is likely to be a core policy of the next\nEuropean Commission (2019-2024).<\/p>\n\n\n\n

This is partly in response to that Sino-American challenge via \u2018Big Tech\u2019 (Facebook, Amazon, Huawei and the like) and related manufacturing technologies (driverless cars, lithium batteries, robotics) \u2013 often summarised as digitalisation. Only five of the 40 biggest global companies and five of the top 100 unicorn firms ($1bn start-ups) are European. Most European industrial groups are very old. There are no modern-day equivalents to, say, Apple or Alibaba. Hence a driving force behind the Fiat-Renault merger is, precisely, \u2018gigantisme\u2019<\/em>.<\/p>\n\n\n\n

But the new European industrial policy (or strategy) goes\nbeyond the determination to keep skin in the game and refuse to be muscled off global\nmarkets by the US and China. Or, indeed, to impose fair and effective taxation\nupon global corporate giants. Increasingly, it is viewed as a response to the\nrise of economic nationalism and populism. Or, as Bruno Le Maire, French\nfinance minister, told Politico recently: \u201cFor the first time in European\nhistory, we will have to face the risk of a total dislocation of the project.\nAnd if we want to be efficient in the fight against populism and the rise of\nnationalism, we need two things: decisions and research.\u201d<\/p>\n\n\n\n

Equally, EU strategists want to build on the perceived\nleadership of Europe in fighting the climate emergency and moving to the\ndecarbonised economy. Ironically, given his exhausting and exhaustive role as\nchief EU Brexit negotiator, Michel Barnier<\/a>\nhas recently come up with a proposed \u201csustainability pact\u201d (green new deal\nvariant) to complement the (straitjacketed) stability & growth pact. This foresees\n\u20ac180bn extra investment annually just to meet the EU\u2019s commitments under the 2015\nParis Agreement.<\/p>\n\n\n\n

Five more years<\/h2>\n\n\n\n

Barnier is, perhaps, one of the \u2018dark\u2019 contenders to be the\nnext Commission president after Jean-Claude Juncker \u2013 if the current front-runner,\nManfred\nWeber<\/a>, is discarded because of the relatively poor showing of the\ncentre-right EPP group in the recent European parliament elections. Another\ncontender is Margrethe Vestager, a Danish Liberal who is current competition\ncommissioner and architect of the decision to block the merger of the rail\nbusinesses of France\u2019s Alstom and Germany\u2019s Siemens.<\/p>\n\n\n\n

Her decision has prompted an even more determined push\nbehind the EU\u2019s industrial policy. Le Maire has teamed up with Peter Altmaier,\nGerman economic minister, to promote the idea of national or, rather, European\nchampions, arguing that a Franco-German group, say, should research and produce\nnew electric batteries rather than rely on the Chinese or Koreans. \u201cMy choice\nis quite clear: I want a free, independent and sovereign Europe,\u201d he said in\nthat Politico interview.<\/p>\n\n\n\n

The pair, both on the political centre-right, produced in February a \u201cManifesto for a European Industrial policy fit for the 21st<\/sup> century<\/a>\u201d that is designed to retain Europe as an industrial powerhouse in 2030. In part, it is a riposte to Beijing\u2019s Made in China 2025 strategy that foresees virtual self-sufficiency in industrial production. But, aside from proposing huge investment in innovation (AI and so on), it also urges substantial loosening of EU state aid rules (are you listening Jeremy Corbyn?) and, among other things, (protectionist) screening of foreign direct investment (FDI) flows.<\/p>\n\n\n\n

The manifesto is not without its critics \u2013 nor is Altmaier\u2019s separate paper on German industrial strategy that wants manufacturing to account for a quarter of gross value-added by 2030 and says the survival of, say, Volkswagen and Deutsche Bank is a vital strategic interest. The old-style \u201cordoliberal<\/a>\u201d economists see it as manipulating the market while others see it as too conservative and even nationalist.<\/p>\n\n\n\n

But Peter Bofinger, a social democratic economist who\nrecently left the official German council of economic advisors (Sachverst\u00e4ndigenrat),\n<\/em>has urged<\/a>\na common European approach to, say, electro-mobility or AI. He backs a green\nindustrial policy for Europe, citing fellow economist Paul de Grauwe (of the\nLSE) on a model for financing such a policy based upon bonds issued by the\nEuropean Investment Bank that can be bought by the European Central Bank. The\noutgoing Commission has separately started investing in \u201ccluster collaborations\u201d\nin segments like nanotechnology and, indeed, batteries (see Vestager response here<\/a>).<\/p>\n\n\n\n

Some of these issues are being grasped and debated by Scottish economists\/commentators such as Common Weal (see here<\/a>). But, amid all the clamour over constitutional matters, little or nothing of this vital strategy has seeped into the mainstream political debate \u2013 apart from the odd nod to \u201cgreen new deal.\u201d Here is another instance where, if it wants to be serious about Europe and its European credentials, Scotland needs to raise its head from self-inspection and join in.<\/p>\n\n\n\n

\n\n\n\n

Further reading: <\/h3>\n\n\n\n

The Future of Europe<\/a>, SCER, 2019<\/p>\n\n\n\n

Franco-German battery plans,<\/a> Euractiv, May 3 2019<\/p>\n\n\n\n

‘World’s first raspberry-picking robot’<\/a> a spinout from University of Plymouth, goes on trial in the UK as the farming industry faces rising labour costs and a reduced supply of East European workers: Guardian 26 May 2019<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The Euro elections are over; now the EU is choosing new leaders for the next five years along wioth a new focus on industrial policy. Are you in, Scotand?<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[319],"tags":[387,67],"class_list":["post-8518","post","type-post","status-publish","format-standard","hentry","category-economy","tag-industrial-policy","tag-industry-4-0"],"_links":{"self":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/posts\/8518","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/comments?post=8518"}],"version-history":[{"count":0,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/posts\/8518\/revisions"}],"wp:attachment":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/media?parent=8518"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/categories?post=8518"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/tags?post=8518"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}