Starmer has one last chance to save dying British industry

Yahoo

09-05-2025

Britain's whisky exports to India will face significantly lower tariffs. And at least some cars and steel can be sold to the US at a lower rate of tax than other countries are paying. With the India and US trade deals signed over the last few days this should have been a great week for British exporters. But there is just one catch. None of it will make any difference unless we have a more competitive industrial base.
The Government is meant to be finalising its strategy for manufacturing, including most crucially a plan to bring down energy costs. But, in reality, the trade deals give the Starmer Government one last chance to save Britain's dying industry – because very soon it will have disappeared completely.
British exporters should be feeling a lot more confident this week. The deal with India will give them far better access to what is already the world's fourth-largest economy, and, at least by some projections, may well be the largest by the middle of the century.
The deal with Donald Trump was far more modest, and only scaled back some of the 'liberation day' tariffs he imposed on April 2. Still, it lifted the levies on the steel and car industries, and it gave the UK better terms for trading with what remains the world's largest market than any of our European rivals. Both of them were significant victories.
Here's the problem, however. You can't sell more spirits into India if you can't get planning permission to expand the distillery or if the workers are too expensive to employ. Likewise, you can't sell more steel into the US if plants are closing down because energy costs are twice the American levels, and you can't ship more cars across the Atlantic if net zero regulations have closed down the factories that used to make them. Even the best trade deal in the world can't help you sell products you don't make any more.
The real problem is that our industrial base has been in rapid decline. The figures are sobering. The UK has slipped out of the top 10 manufacturing countries in the world, and now ranks only 12th, behind Italy and Mexico.
There has been a 38pc fall in chemicals output since 2021, electrical equipment is down by 50pc, and even pharmaceutical production, which is meant to be one of our strongest industries, has been declining at an annual 6pc rate for the last decade.
Only on Friday, we learnt that one of the UK's largest chemicals plants, the Saudi owned Olefins 6 facility in Teesside, is now at risk of closure as well.
A trade deal is not going to change any of those trends. It won't bring down crippling energy costs that have driven industrial prices in the UK to some of the highest levels in the world. It won't bring down the employment taxes that have already been pushed up by this Government to levels that have made it too expensive to employ people, nor will they fix a minimum wage that has reached levels where it has destroyed jobs, or employment laws that make it too risky to hire anyone.
And they won't change crushing regulations that make it virtually impossible to expand a factory even if demand increases, or impose crippling targets that double the cost and triple the time it takes to expand. All of those have made the UK one of the hardest, most expensive countries in the world to make things. In the face of so many obstacles, it is hardly surprising that so many companies are giving up, such as at the huge Grangemouth crude processing plant that stopped production last month.
The Government is meant to be finally unveiling its industrial strategy over the summer with sectors such as defence, life sciences and advanced manufacturing singled out for extra help. Intriguingly, the advance briefings suggest that it will include some ideas for tackling sky-high energy costs, although it is hard to see how that will be possible without watering down the commitment to be a 'world leader' on hitting net zero or allowing new developments in the North Sea, or even – gasp! – taking another look at how safe fracking has proved in the US and Canada.
If it just involves subsidies, or some waffle about GB Energy, that is not going to help anyone. The industrial strategy when it finally arrives needs to target sectors with the potential for high growth, but most crucially it needs to start taking down the barriers that have made life so tough for manufacturing. The trade deals should provide the perfect opportunity for the government to be a lot bolder and more radical than it could have been only a few weeks ago. It now needs to summon up the political will to start making some changes.
After this week, the global market is more open to British manufacturers than it has been for a generation or more, and certainly more open than it would be if we were still trapped within the European Union.
If we can build on them, access to the US and India, and many other countries as well, can improve over the next few years. But you can't export stuff you have lost the capacity to make. In reality, the trade deals will only work if they are accompanied by radical domestic policies to improve our competitiveness.
With its industrial strategy set to be unveiled over the summer, and with trade deals starting to get signed, the Starmer government has one last chance to rescue an industrial base that is in steep decline. If it does not seize the moment – and depressingly there is very little evidence that it will – then very soon it will be too late to rescue what little of our manufacturing industry remains.
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