Thatcherite Tories have long been suspicious of the idea of an industrial strategy. Their view was that it wasn’t the job of government to pick winners (or, more likely, protect losers). But the pandemic has changed all that, I say in the Times this morning. The old certainties of globalisation have come crashing down. One influential secretary of state’s view is that ‘it proves the error once and for all of the Blair-era assumption that the location of your manufacturing doesn’t matter.’
The last year has shown that even in this globalised age the nation state trumps the market. You could see this in the scramble for personal protective equipment (PPE) last spring when countries stopped firms from honouring contracts until they were sure their domestic needs had been met. The same dynamic is beginning to assert itself on vaccines. Just look at how the German government is pushing for EU export controls on vaccine doses.
These new headwinds pose a particular risk for Brexit Britain, a country stuck between two large economies with protectionist tendencies, the United States and the European Union. The government’s decision last year to subsidise the development of a vaccine manufacturing base here was a response to this problem. It worried that waiting for imports raised the prospect of delay, or even expropriation. In the same way that the second world war left politicians with a desire for food security, the Covid crisis has prompted a desire for self-sufficiency in medical supplies.
But the approach will go beyond medicine. One cabinet minister argues that ‘the same thinking applies to telecommunications companies’.
It might seem odd to hear members of the party of Margaret Thatcher talking in these rather Gaullist terms. But while globalisation has made the world much richer, Covid has shown the need for national self-sufficiency in crucial areas and the dangers of excessive reliance on one country, especially an authoritarian dictatorship such as China.