FRANKFURT (Reuters) - Britain’s proposed drive to foster manufacturing and technology after leaving the European Union will do little to offset the damage from losing access to the trade bloc, the spokesman for an elite club of some 50 European industry bosses said.
Britain’s government this week unveiled a new interventionist approach to boost manufacturing and technology for the post-Brexit era and to rebalance an economy that relies heavily on services.
Kurt Bock, head of German chemicals giant BASF who speaks for the European industry chiefs, said, “If we’re talking about an industrial policy that aims to control what should grow and what should shrink, I can’t really see that having been successful in any open society.”
Bock made the remarks while presenting the European Round Table of Industrialists’ (ERT) annual report on Friday. ERT members oversee more than 2.25 trillion euros (1.9 trillion pounds) in revenues between them.
In their report, ERT members warned against protectionism they perceive to be on the rise since the financial crisis of 2007-08, even without taking into account Brexit and trade barriers proposed by new U.S. President Donald Trump.
Ahead of Britain’s vote last year to leave the EU, the group warned that the UK would be weaker outside the bloc and that investment and job creation in Europe benefited from EU unity.
Bock said tax cuts would do little to lure investments and jobs to Britain. British finance minister Philip Hammond this month hinted at this option should Britain be denied a comprehensive trading deal with the EU after Brexit.
“For industries focused on trading, financial markets above all, this may provide a special incentive but if we’re talking about manufacturing, what counts is productivity and the costs of labour and raw materials,” Bock said in a telephone interview with Reuters.
“It’s certainly not enough to offset the disadvantage from leaving the EU.”
The ERT also urged European lawmakers to foster innovation and digitisation to close a gap with the United States.
Setting better rules for the telecoms industry to encourage investments in much-needed broadband data networks could go some way to support the British economy but even that would be more effective if coordinated with European neighbours, Bock said.
“An individual nation can make its mark here if it wants to, but the benefits are limited because it’s of course embedded in a global and European structure,” said Bock, who is chairman of ERT’s competitiveness working group.
Europe’s digital infrastructure is in dire need of an upgrade, with per capita investments in this area at half the level seen in the United States, the ERT warned.
ERT members include CEOs and chairmen of blue chip companies from Turkey to Finland and also leading figures at British household names Vodafone, BP and Rolls-Royce.
Additional reporting by Patricia Weiss; editing by Mark Heinrich
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