To what extent can the government help boost domestic industry and manufacturing?
In recent weeks, several politicians have talked about their desire to help UK manufacturing and boost industrial production. It may be a noble endeavour to try and boost UK industry and rebalance the economy away from financial services to manufacturing. But, how practical is it for the government to actually boost manufacturing output?
The main ways governments might be able to help industry could include:
- Stable macro economic environment – low inflation, sustained positive economic growth
- Satisfactory availability of credit – A working banking sector willing to lend to firms
- Investment in infrastructure – better transport links to reduce firms costs
- Improved labour productivity – through better education and training of workers
- Increased geographical mobility – easy for firms and workers to move
- Removal of unnecessary red tape and regulations
- Environment which promotes research & development
- Subsidy to help develop certain technologies.
- Stable exchange rate – avoiding over-valuation of the exchange rate.
- Low tax rates.