Should the UK shift away from manufacturing to focus on a knowledge-based economy?
The UK has experienced a faster shift from manufacturing to services and knowledge-intensive sectors than most advanced economies, with manufacturing now around 9-10% of GDP and services over 80%. Knowledge-intensive activities drive most R&D, productivity gains and exports alongside advanced manufacturing, yet many UK research spinouts and ideas are commercialised overseas. The current government backs an industrial strategy supporting both advanced manufacturing and frontier technologies such as AI, life sciences and quantum while emphasising innovation and skills to raise productivity.
8 Opinions
No, to be independent state we need both. Being self-sufficient is the key to success. Obviously we should expand services and knowledge-intensive sectors where possible but you never place all your eggs into one basket. In this case, diversity is a positive factor.
Creative thought and services, without the partner ability to build and deliver, leaves us exposed and dependent on other nations like China and India.
Ultimately this is happening whether we focus on it or not - most manufacturing is always going to happen in low wage economies. Why be Canute and try to hold back the tide?
You can't put "Made in Britain" on a thought. Opinions, ideas, learning, thoughts, the opportunities are everywhere and endless. Manufacturing is specialised, requires more than an extremely brilliant mind, it needs skills with a variety of things. We can't just turn out amazing philosophers, we need people with practical skills, to teach those skills to others. Otherwise we'll be importing every item we require from abroad.
A better question is why are ideas commercialised overseas, rather than develop them further in the UK? And the reason is market friction. We have very high planning costs, high regulatory compliance costs, high building costs, high energy costs, oh, and high payroll and corporation taxes too. Investors weigh the opportunity cost of investing in the UK and wisely decide not to. Governments set the market conditions, and industry responds rationally.
The fantasy that Britain can just be an 'idea factory' while abandoning manufacturing is what gutted our regional heartlands for 40 years. An economy that makes nothing is fragile and traps wealth in London. Plus, if we don't build what we invent, foreign rivals will commercialise our research and leave us reliant on imports. A serious country has to actually make things.