ippr: support manufacturing to make capitalism better

Ippr’s Tony Dolphin, a Left Foot Forward contributer, today publishes a new report called, “How to Make Capitalism Better.” The report has a number of findings but perhaps most significant are Dolphin’s conclusions, summarised in his article for Comment Is Free, that:

“Economic growth in the UK will have to be based less on debt-fuelled household consumption and more on exports and business investment, but this will not happen on its own. There is no enthusiasm for a return to the days when the government tried to pick winners in the economy, but it must be active in addressing market failures where they occur in innovation, training, infrastructure and finance.”

In the report, Dolphin writes:

“Over this period [2001 to 2008], employment in the UK rose by just over 1.75 million in total, but this growth was heavily concentrated in two sectors: public administration, education and health on the one hand and banking, finance and business services on the other … while manufacturing employment fell by almost 1 million over the same period.”

The graph below, reproduced from the report shows this in stark terms.

Peter Mandelson recently told Left Foot Forward that, “Where there are barriers that are holding … new innovative start up or fast growing companies, those that have new ideas and are capable with the right backing of turning them into world beating products or services, and there’s something that government can do to back those, that’s what we should be doing.” But it is unclear whether this will be enough for tomorrow’s challenges.