How Britain gets its future back Cheap energy is just the start

“It’s only when the tide goes out”, says the legendary investor Warren Buffet, “that you find out who was swimming naked”. Any second-rate trader can look like a financial whizzkid in a bull market — but when leaner times return we learn about everyone’s true mettle. The same applies to countries. The chatterati despair, grasping their thinning, greying heads of hair: where has the easy charm of elected politicians gone; why does nothing work; why are we consumed by permacrisis; why can’t we go back to normal? But the normalcy of which they speak, the end-of-history ascendency of liberal politics at home and global integration abroad, is gone and not returning. And without a post-Cold War peace dividend, the unipolar moment, Pax Americana, financialisation, free-flowing North Sea energy, and ever-more transnational markets, Britain has been caught skinny-dipping.

We rely on the developmentalist economies of the Far East for our manufactured goods, on the Norwegians for our oil and gas-powered energy, on Europe for our food, Wall Street for our payments systems, Silicon Valley for our digital worlds, and on a diverse caste of cheap, subaltern labour to staff our care homes, serve us coffee, clean our offices, and deliver our meals. In light of the recent outbursts from a mercurial White House, British bank bosses have begun to plan for an alternative to the US’s Visa and Mastercard systems. And not a moment too soon: when the President threatened a Nato ally with annexation last month, all we could offer was bland platitudes, a humiliating prostration before hard power.

Even those few sectors in which we do excel — the consultancies, and the legal and financial services that we still export to the world — seem designed for a softer-edged era. Like Tony Blair himself, the “knowledge economy” was the future once, or so we were told. The real value was created through the immaterial labour practiced in the metropoles. Globalisation was non-negotiable; “you might as well debate over whether autumn should follow summer”, in the words of its leading evangelist, and Britain would ride the wave, prospering at the cutting edge of international bullshit artistry. Once the birthplace of the Industrial Revolution has surrendered its economic autonomy to the whims of global finance capital, there’s nothing left to do but turn the art of corporate jargon and consultant-sophistry into its unique specialism — right before the glossy reports and PowerPoints are automated by AI.

But now the tide hasn’t so much gone out as receded past the horizon. Not only is automation coming for the white-collar service class, but the transatlantic alliance is more frayed than in its whole history. The “normal” of liberal-technocratic triumphalism looks like a one-time-only blip, a bubble punctured by the collapse of Lehman, its final illusions extinguished by Covid-19. A world of Great Power rivalry has returned — the Americans proving Lord Palmerston’s old maxim that there are “no eternal allies or perpetual enemies, only eternal interests”, and judging that it is not in Washington’s eternal interests to simultaneously confront the rising giant of Beijing while being locked into conflict with Russia on a declining continent that cannot defend its own peripheries.

And so, a political consensus is forming: we must reindustrialise. We must rebuild our national productive capacities. Without a solid manufacturing base, we are dangerously exposed in a hostile world of geopolitical contestation. In his first speech as the putative “shadow chancellor” this week, Robert Jenrick told us that Reform would “restore our proud industrial heritage and create good jobs for British workers once again”. “We do believe in industrial strategy”, he assured any listeners confused by his about-turn away from the party of the sovereign individual and free and open markets.

In this, Jenrick is only echoing his leader Nigel Farage, a man who Maurice Glasman once described as “a saloon-bar Thatcherite”, but who has now taken to floating the idea of public ownership and equity stakes in British engineering firms, lamenting the loss of “shipbuilding, cement making, chemicals, steel”. “It’s all gone off to India and China”, he says, articulating all the cultural-political sovereigntist themes of post-industrial Britain — lost identity, lost purpose, lost control. Yet all those on-the-ground resentments are ultimately the result of conscious macroeconomic decisions on the part of the monetarists: a strong sterling is a boon for the City but blows a hole in the UK’s balance of trade that can only be filled by constant rounds of inward foreign investment; the unedifying and unending ritual of flogging the family silver, until every old family firm and former national champion is in the portfolio of a Gulf state.

Gone are those days, Farage and Jenrick promise. Instead, Reform will pursue something called the “politics of national preference”, at least according to one of the party’s ideological gurus, James Orr, the national-conservative theologian and disciple of the patrician, communitarian Toryism of Roger Scruton.

And if all of this sounds familiar, that might be because it echoes the lines of our current party of government. Chancellor Rachel Reeves promised to “make, sell and buy more in Britain”. Her economic philosophy would be rooted in “securonomics”: the doctrine of maximised efficiency would give way to the new watchword of resilience, and the local, national provenance of goods would be prioritised over their price. If Thatcher’s heirs have seen the writing on the wall, the second-generation of Blairism have too: a country that makes things, that has a trade surplus in goods, will fare better in an age of chaotic, global fragmentation.

Yet if we’re heavy on the diagnostics, we’re light on the prescription. Jenrick might position his vision as a “new political economy”, but nothing that’s so far been proposed will go any further towards “reindustrialisation” than Reeves’ defunct “securonomics”. The latter was, more-or-less, dead on arrival, always to be sacrificed on the altar of the Labour leadership’s innate caution and overdue respect for established procedures. It is not in the nature of the apolitical, robotic meeting-chair-in-chief to challenge any of the orthodoxies repeated from the mouths of a recalcitrant, Treasury-brained senior civil servant, let alone the Confederation of British Industry.

To be fair, Jenrick’s “new political economy” differs from Labour’s take on industrial renaissance in one crucial respect. For Reform, the net-zero project is the primary blockage to the resuscitation of heavy manufacturing, particularly in high-carbon, energy-intensive sectors being crushed under the weight of subsidised renewables and grid costs. For Labour, the green transition is the exact opposite: the catalyst for the transformation of the British economy. In place of the dark Satanic mills of Victorian industry, and the monotowns of Fordist mass production, the new industrial revolution will restore England’s reputation as a green and pleasant land, a global leader in wind power with a sideline in batteries, solar cells and nuclear energy.

Both parties are peddling a fantasy. The seeds of deindustrialisation were sown long before decarbonisation became a uniparty dogma. The loss of much of Britain’s heavy industry took place even as we were net energy exporters. Besides, the Chinese economic miracle was built on more than cheap coal. The aggressive industrial policy contained in the Communist Party’s Made in China 2025  has transformed the country from the world’s sweatshop into a high-tech centre of advanced manufacturing, with massive, state-directed investment into highly competitive, strategic and innovative sectors, complementing a long-term policy of strict capital controls, high tariff walls, and a central bank that militantly supports investment-led growth. That’s reflected in Chinese exports: no more the crowded production lines of cliche, with the PRC instead becoming a global leader in high-tech sectors, robotics and AI.

In response, the US first mobilised debt-financed subsidies to “reshore” jobs to the American Rust Belt. “Bidenomics”, as it was called, attempted to lure back manufacturers in high-tech sectors by handing them taxpayer bungs. The results were mixed. Hundreds of billions were spent, but restive voters rewarded the Democrats by electing Donald Trump. The irony, of course, is that Trump has continued with the same “decoupling” strategy pursued by his predecessor, along the way hiding American industry behind a new and belligerent protectionism. That has now been hampered by the strength of the US constitution’s separation of powers, and a Supreme Court ruling that the President’s Liberation Day and subsequent tariffs are unconstitutional. Nevertheless, the idea that the UK, in this international context, could start a new industrial revolution simply by abandoning net zero targets is risible. Another latter-day Reformer Suella Bravermen might want us to believe she has undergone a Damascene conversion to Reform’s apparent “socialism” with a Faragist face, but Jenrick’s desire to demonstrate subservience to the strictures of the OBR and its originator George Osborne precludes any radical rupture with decades of economic failure.

Meanwhile, Labour’s positioning of net zero as a catalyst for industrial growth is equally a chimera — our expensive adoption of renewables is destroying the margins of what remains of heavy industry while propping up Scandinavian social democracy and Chinese developmentalism via the rapid import of Danish wind turbines and Chinese solar cells and electric vehicles. All of this while our reliance on Norwegian and US shale gas continues unabated. As with many of the thin promises of Starmerism, “securonomics” has never been translated from rhetoric to reality.

And so Britain remains buffeted by forces beyond its control, unwilling or unable to reassert itself. A genuine plan for national sovereignty would combine the dynamism of markets with the strategic direction that can only be provided by an agile, active state, one willing to do away with shibboleths that were built for a bygone world. In practice, yes, that means driving down energy costs as a matter of priority, but also supporting capital spending with unified fiscal and monetary policy. Primary budget surpluses would maintain market confidence while extra borrowing for long-term, pro-growth capital projects could be facilitated by a reformed Bank of England. The deep pools of capital in the nation’s pension pots could be re-domesticated and mobilised towards infrastructure and industrial investment.

This would be shadowed by other changes. For one thing, chancellors would set budgets that move us away from short-term cash transfers and, again, towards long-term investments. Welfare and pensions bills would be brought under control, moving from means-tested to contributory systems, while the tax revenue burden would shift away from work and patient, productive capital, and towards rent-seeking, unproductive assets, land, and real estate.

Core to this project would be an empowered executive, with a restoration of ministerial authority unencumbered by unaccountable bureaucracies, or an activist judiciary, and unafraid of disciplining and managing footloose capital to direct it towards strategic goals. The era of free movement of capital, labour, goods and services is giving way to one in which nations prosper with enforced capital controls, tariffs and an industrial policy that maintains a strictly national economy. Here, the success of the national payments system will be instructive. But resilience on other spheres should follow. The government last year intervened to rescue domestic steel-making capacity in Scunthorpe, and has since made noises about defence-industrial rejuvenation as a fulcrum for manufacturing revival. But signs that they can turn words and sentiment into concrete action are few; the future will belong to those states that act, that “just do things”, not those paralysed by their own ideological quietism.

Nations, like Buffet’s investors, are truly tested when the tide goes out. It’s only now, in an age of tumult, that we discover that our embrace of hyper-globalisation depended on geopolitical conditions that no longer exist. We bred over-dependency, and are now learning that true strategic autonomy is far harder to rebuild than it was to sell off to the highest bidder.

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