Rachel Reeves: globalisation is dead
The Shadow Chancellor warned that the system has been gamed for too long
“Globalisation, as we once knew it, is dead,” Shadow Chancellor Rachel Reeves said in a major speech in Washington D.C. today. Speaking at the Peterson Institute think tank, the Labour politician set out her party’s vision for Britain’s economy, as well as declaring that “the old model is failing.”
In the speech, titled “Securonomics”, Reeves argued that “supply chains that prioritise only what is cheapest and fastest struggle when a crisis strikes, be that PPE during Covid or energy following the war in Ukraine”. Talking about the limitations of globalisation, the Shadow Chancellor pointed to “a globalised system [that] can be gamed by countries like China who have undercut and ignored the international trading rules, and made it impossible for our own to compete.”
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Speaking to the Financial Times ahead of today’s speech, Reeves said that while Labour’s economic plan must be based on “the rock of fiscal responsibility”, it is in Britain’s interest to move away from Chinese supply chains. “We have allowed the production of critical technologies to slip from our grasp,” she said, “costing us jobs and compromising our security.”
The location of Reeves’s speech was significant, as she suggested that Conservative Party opposition to the Biden administration’s economic model has put a wedge between Britain and the United States in recent years. “In an uncertain world,” she claimed, “we cannot rely on a handful of industries for our economic success, nor can we outsource the supply of critical goods and services to the lowest bidder.”
Reeves pointed to New Labour’s success in “reviving industrial strategy in Britain” in the wake of the 2008 financial crash, and suggested that a government led by Sir Keir Starmer could emulate this policy focus after industry has been “hollowed out” by Rishi Sunak. Should Labour win the next general election, the party would devote itself to “rebuilding the industrial foundations that we have lost and which has left us exposed to global shocks”, she said.
Such a move is necessary, the Shadow Chancellor claimed, in what she termed the “Age of Insecurity”, a period in which three “once in a lifetime events” — the UK’s exit from the European Union, the Covid-19 pandemic and the Ukraine war — have taken place in quick succession since 2016. She singled out China for “unbalancing the old global order of a unipolar world”, and said that “while the old ‘Washington Consensus’ might have been swept away, a new one is emerging.”
Reeves, who has been in her current post since 2021, has become an increasingly influential figure within the Labour Party, topping the New Statesman’s Left Power List ahead of Starmer this month and frequently appearing as one of his most likely successors. She has aimed to win back support from business leaders, and has consistently placed “fiscal discipline” at the heart of her economic doctrine.
As to what can replace “the old hyper-globalisation”, Reeves argued that “a new era of multilateral partnership is emerging in its place”, without the excesses of the former. The transition to Labour’s economic plan, according to the Leeds West MP, can only come about by “accepting that the world has changed and Britain must change with it.”
Reeves is at least able to articulate an economic position in something approaching a coherent fashion, whether or not one agrees with her politics (i don’t). Should Starmer fail to score with an open goal gaping at next year’s election, she’s positioning herself to succeed him and seems to have a brain operating behind her eyes rather than a vacant space.
Not to me – her example is preposterous.
”be that PPE during Covid or energy following the war in Ukraine”.”
The PPP was completely useless, unnecessary, and merely a mechanism for waste and corruption, and now feeds the incinerators.
The energy problem is EU, UK, sanctioned the seller of their energy! To no good at all, but to Very great self harm! It did boost USA balance of payments as they stepped in and sold the gas for 10 X the Russian price – but this is how it goes when you are shooting your self in the foot daily – you end up harmed. (and wait till the crops get harvested – without cheap Russian gas to make fertilizers, the farmers have cut back – and it is a lineal graph – less fertilizer, less crops, that and it killed the industrial sectors)
You have a point but no in the way you suggest.
It is not realistic to expect any business to maintain spare capacity sitting idle just in case another pandemic is visited upon us at some point in the next 100 years, and there is also the issue of sourcing raw materials.
There were a number of manufacturers of PPE who geared up (acquiring additional manufacturing space and equipment and heavily recruiting) to meet the surge in demand when bird flu was the next big thing only to find themselves in severe financial difficulties when it turned out the bird flu was not the next big thing.
Multinational corporations set up or moved their manufacturing operations to China and other Asian countries because those markets are faster growing and far cheaper to operate in than the UK and EU. Governments cannot wave a magic wand and get them to reverse their decisions unless it is economic for them to do so. Nothing in Labour’s Net Zero, taxation, spending, employment and regulatory policies is likely to make that happen. Without a real will to make the hard decisions required to reverse Britain’s loss of competitiveness, talk of changing global supply chains is hot air. Rachel Reeves would have been better to save the carbon emissions her journey to Washington caused.
I really don’t know why anyone rates Rachel Reeves.
She’s just parroting whatever the received media view is on any particular topic. She is – in Tony Benn’s memorable phrase – a weathervane and not a signpost.
It’s just endless bland words and platitudes. Time for a new EdStone !
Let’s consider this quote:
““In an uncertain world,” she claimed, “we cannot rely on a handful of industries for our economic success, nor can we outsource the supply of critical goods and services to the lowest bidder.””
What does that actually mean ? Thta we should pay more for everything ? It’s not qualified in any way to say that *sometimes* we might need to pay more. The implication is that we should always pay more – regardless of actual need. With the people charged with deciding what are “critical goods and services” those that are least competent to do so.
I’d be very curious to understand whether
“rebuilding the industrial foundations that we have lost and which has left us exposed to global shocks”,
includes investing in UK domestic oil and gas production and coking coal mines in Cumbria.
It’s all just words.
“Not relying on a handful of industries” is code for destroying oil and gas while subsidising “green energy” which is code for wind and solar.
“fiscal discipline” = “hey poor people, f**k you!”
Yesterday she was advocating financial repression theough forced holding in govt wealth fund (doubtless stuffed full of negative yielding bonds). Labour will certainly impoverish us. Time for Plan B
“Reeves pointed to New Labour’s success in “reviving industrial strategy in Britain” in the wake of the 2008 financial crash”.
Did I miss something ?
They will probably buy the steelworks for £1 and then watch them fail when Germany comes up with its new GreenSteel – then non-green steel will attract a tax.
Also, the nation will take on for ever the pension fund for retired and not-yet-retired steelworkers. Sounds like a plan to me.
We’ve just agreed to pay Tata £800m, funded by the taxpayer, to keep the South Wales steelworks going and a battery factor in Bridgwater. One could debate whether an indication of ‘market failure’ and post Brexit desperation.
The Ukraine war is indeed a major economic event, but that is mostly by the West’s own choice. Russia’s security concerns could and should have been settled by better Western diplomacy and less aggressive NATO expansion. And when that failed, the local dispute need not have been turned into a world-wide economic war by sanctions weaponising trade, oil and gas.
I suspect that, in practice, this simply introduces Globalisation 2.0.
The Chinese offered factories and cheap labour to manufacture things at lower cost. India, who could barely afford international calls once, call us daily from call centres. We said yes.
We buy smart phones, TVs etc that we can’t afford to make at an economic price in the West. Even then the cost is spread over years at low interest.
Do we say No? We could easily ditch Amazon and ebay. Stop blaming China for all the ills of the West. Do we go without to bankrupt China? Far better to keep them busy, we need no more Mao Tse Tungs, or Zedongs. If we’re worried about them expanding we shouldn’t have paid them to do it.
I am not sure an industrial strategy based on recoiling from the last two big mistakes the country made, is likely to be much use going forward.
Straight from the servants hall.. all she is missing is the bedwarmer…
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