Given the mountains of economic garbage we’ve been served up by both right-wing and left-wing Brexiteers in recent years, the words “benefits” and “Brexit” used in the same sentence inevitably sets off alarm bells.
So it was disconcerting to see them juxtaposed in a Jeremy Corbyn speech. “Our exporters should be able to take proper advantage of the one benefit to them that Brexit has already brought, a more competitive pound,” the Labour leader told industrialists in Birmingham on Tuesday.
“After the EU referendum result, the pound became more competitive and that should have helped our exporters. But they are being sold out by a lack of a Conservative government industrial plan, which has left our economy far too reliant on imports.”
The framing is unfortunate. The reason for the record drop in the pound on the night of the referendum was a rush of expectation across financial markets that the UK economy will be considerably weaker outside the EU’s single market and customs union. There’s no long-term economic benefit implied in the currency slump – only cost.
Yet, in fairness to Corbyn it’s not mad to suggest that a weaker pound should be providing a short-term lift for manufacturing firms. Even the Bank of England has suggested that UK manufacturers have been in something of a “sweet spot”, with sterling weak but Britain still, for now, remaining in the EU’s economic institutions.
More troubling are Corbyn’s comments on imports. “We’ve been told that it’s good, advanced even – for our country to manufacture less and less and instead rely on cheap labour abroad to produce imports, while we focus on the City of London and the finance sector,” he lamented.
There’s nothing wrong with promoting a rebalancing of the UK economy away from its 30-year over-reliance on finance. Yet the implication that the UK would benefit from churning out manufactured products domestically that are currently made in the developing world is nonsense.
New research from the Resolution Foundation this week shows incomes for the worst off in Britain are no higher than they were 15 years ago. A major part of the reason is that low-skilled men have seen their weekly hours collapse. Reshoring low-value manufacturing will not help such people. Nor will it restore depressed communities to economic health. That is the kind of con artist’s fantasy that Donald Trump has been spinning to US steel workers in the American rust belt.
The only sensible and feasible vision for the future of UK manufacturing is a high value added one, using skilled workers, cutting-edge equipment and, if necessary, foreign investment and expertise.
Corbyn’s reference to “cheap labour abroad” smacks of the beguiling creed of economic nationalism. His remarks may not be explicitly anti-foreigner but they are still resonant of Trump-style tirades against corporate outsourcing.
And, in this context, his talk of keeping government contracts in the UK, rather than allowing foreign firms to bid for them, was also disturbing.
Yes, all nations already do this to some extent. But one has to be extremely careful about turning it into a general principle of government. For if you shut others out of your market, they will, inevitably, shut you out of theirs.
Corbyn joined the Daily Mail, of all publications, in complaining about the fact that the contract to manufacture new British passports has been awarded to a French firm, rather than Gateshead’s De La Rue.
But De La Rue does printing jobs for many foreign governments. Make no mistake, if all contracts were awarded on nationality grounds British firms – and British workers – would ultimately suffer more than they would gain.
In truth, the overall tone of Corbyn’s speech was more than a little alarming. The protection that UK workers need is from destabilising globalisation of “hot money” capital flows and undercapitalised multinational banks, not the globalisation of manufacturers’ supply chains.
They need protections from macroeconomic mismanagement in the form of self-defeating austerity, not from “cheap labour abroad”.
The problems of the British economy stem from under-investment, deficient training, short-termist bosses and shareholders, unbalanced regional development, an official blind eye turned to inflows of dirty money, and poor macroeconomic management – and Corbyn was justified in raging against all of these. But he was quite wrong to blame the UK’s general policy of economic openness.
At best this speech was an unwelcome distraction from the dominant challenge of protecting UK jobs in the face of the catastrophe of a “no deal” Brexit and the long-term pain of a hard one. At worst it was a cynical dog whistle aimed at already grievously misled Leave voters – and the dipping of Labour’s toe into some very dangerous waters.