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Britain is falling behind, thanks to Brexit

Britain led the first industrial revolution, but Europe will lead the next

Image: The New European/Getty

The unfolding economic crisis and a string of bad-news stories have led to much soul-searching and confessions of “Bregret” from voters across the nation. But Britain’s economic stagnation flows deeper than Brexit alone, and when we look to the rest of the continent, it’s easy to see why. While Europe accelerates into the next industrial revolution, Britain has not only pulled up the handbrake, but is now contemplating entering reverse.
Many commentators have proclaimed the 21st century to be that of the fourth industrial revolution (or Industry 4.0). This next great leap forward will involve mass digitalisation, automated networks of “intelligent robots”, and advanced manufacturing techniques, such as 3D printing. Big data will be leveraged to enable fast, efficient decision-making on factory floors, and productivity will accelerate.

But, in order to achieve this high-tech future, modern democracies must be ready to invest for success – and our European neighbours are confidently rising to the challenge. In a recent speech on Europe’s digital future, EU Commission president Ursula von der Leyen declared the 2020s to be “Europe’s Digital Decade” and promised to provide unprecedented levels of investment in what she dubbed “our Marshall Plan for a digital Europe.”

What von der Leyen’s promise translates to is over €807 billion earmarked up to 2026, to aid the digital transition and boost productivity. As well as financing new innovative commercial projects, Europe’s existing air and rail links will be upgraded and made greener, and communication networks will be expanded so that everyone has faster, cheaper broadband. The message from the commission is clear: in order for developed nations to stay competitive, state investment is critical.

By dramatic contrast, new research reveals that the UK falls significantly behind other European countries in the adoption of these key new technologies. British imports of advanced industrial robotics are one of the lowest in Europe, with import values ($3.1 per 1,000 workers) that exceed only Latvia ($2.5), Greece ($1.5) and Cyprus ($0.0). When it comes to additive manufacturing (new techniques which speed up processing and reduce waste) Britain imports less relevant machinery than countries such as Lithuania and Slovenia ($4.5 compared to $50.2 and $65.8 per 1,000 workers, respectively).

In practice, this means antiquated British production lines, still relying upon manual inputs, and workers shouting updates across the factory floor. A salient example of not only stagnation, but an active move backwards, is that of the humble car wash. A government report from the Environmental Audit Committee revealed in 2018 that the number of automated car washes found in petrol stations across the UK had halved over the preceding 10 years, as they were replaced by hand car wash services. “In Britain and the US, many have been worrying whether the robots are going to take all of our jobs”, economist Duncan Weldon recently joked “but in fact, we’ve been taking the robots’ jobs”.

Clearly, British economic decline does not hinge on how we wash our cars, but our manual preferences are reflective of a broader backwards trend. While Britain rushes to hand out buckets and wet sponges, European factories are churning out goods using state-of-the-art robotics, saving time, money and materials.

But Britain is not only falling behind on new technology – our adoption of last century’s updates have also been far too slow. Most concerningly, British internet coverage lags behind other advanced European economies. 2022 saw British download speeds at almost half that of France (72mbps compared to 120), despite a considerably smaller landmass to cover when updating connections. In some regions of Scotland, this drops as low as 26mbps. As more employees switch to working from home, this connectivity gap will have an increasing impact on productivity, particularly as the housing crisis pushes more workers out of the major cities to more rural areas.

Moreover, Industry 4.0 is not merely digital; it is also green. While the first industrial revolution filled the skies with soot, nations (and manufacturers) today know that both climate and economic survival depends upon new eco-friendly technologies. To support this, the European Commission is funding commercial initiatives that will aid the bloc in transitioning to a low-carbon economy, to the tune of €10 billion. Projects currently receiving support include the rollout of familiar technologies like new offshore wind farms in the North Sea, as well as more cutting-edge work, such as a Swedish project to convert CO2 into synthetic aviation fuel.

By contrast, a report this month by Energy UK revealed that Britain is on course for a £62bn investment gap in the funding required to meet its 2030 climate goals. The report warns that the government’s failure to act will result in “higher energy bills for longer, increased emissions, and continued reliance on volatile and expensive international energy markets”. Indeed, the UK’s energy policy continues to move resolutely backwards, as the failure to invest in new eco-technology is supplemented by such decisions as the bizarre recent approval of the first new coal mine in 30 years, in Cumbria.

The effects of the UK’s chronic investment gap are already starting to show. Per capita income in the EU grew by 8.5% from 2016 to 2022, while the UK saw growth of only 3.8%. Although we currently remain above the EU in actual terms ($51,300 compared with $38,100 in 2023), our already low growth rate, combined with current inaction, means we are on track to fall behind in the near future. The consequent effects on British standards of living could be grave in a country where many are already reliant on food banks and cannot afford to heat their homes.

Yet a lack of state investment in the future is not Britain’s only weakness. Indeed, the UK’s position is even more perilous due to the erosion, since the 1980s, of its existing infrastructural base. Our past industrial success hinged on the state’s willingness to invest in the country’s underlying infrastructure; infrastructure for which the last decade of austerity was the final poison pill. Consequently, we now face a post-Brexit world without the tools we need to make it alone: without affordable utilities, we cannot produce goods efficiently, and without a strong transport system, we cannot move them at economical prices.

But infrastructure is not only physical – we also need to invest in high-quality education, free for all, in order to produce an intelligent and capable workforce. Ruth Strachan, writing for Investment Monitor, points out that “talented and tech-savvy workers are key to running smart factories and implementing successful 4.0 strategies.” If Britain is to succeed in a digital future, we need to be able to train our children in science, coding and data analysis, as well as to promote the critical thinking skills that will produce further innovations.

The IMD business school produces a ranking system for talent competitiveness, which measures the degree to which countries foster educational achievement and attract international talent. For overall competitiveness, the UK ranked 28th in the world in 2022 – a backward slide of seven places on the previous year. On the investment and development measure alone, Britain’s place fell to 40th, behind Kazakhstan and Botswana. By contrast, the top 10 economies are all European (with the exception of Israel), as the continent invests in its human capital. Worse, Britain’s failure to plan for the future means that we can expect our international attractiveness to decline further as time goes on.

If the UK is to halt the slide back to a low-automation economy, then we also need to ensure that manual labour cannot undercut machines. As long as labour remains so cheap that it wins out against technology – such as our sponge-wielding army of car washers – we cannot boost growth. In practice, this means raising British wages. As the TNE columnist and economic commentator Paul Mason points out, “companies would react to rising wages by promoting rapid automation. Hand car washes would probably shrink to a couple of thousand luxury valeting operations, and the investment… in machines would pay off. Productivity would increase.”

The power is once again with the government to support workers by strengthening their bargaining power vis-à-vis employers, and to explore options such as universal basic income. This would not only increase productivity, but crucially, it would also allow those gains to be shared more equitably with the population as a whole. If robots are going to take our jobs then we should be able to enjoy a four-day week, without a drop in our earnings or standard of living.

As things stand, the sunlit uplands of a green, digital economy, and the increased standard of living it promises, remain some way off. Rather than leveraging the gains of our industrial past to invest for the future, the country that led the first industrial revolution is barely limping into the next.

It may well be that Britain’s history as a global economic power has rendered our leaders complacent, but we must not forget what powered our rise from a small island in the Atlantic to an industrial powerhouse. Similarly, although Brexit has been a disaster for our economy, it is not the sole cause of our current economic woes.

Whether a lack of investment or wage stagnation, the problem boils down to the state’s inactivity. To enable the green, digital transition, the government needs to update our creaking infrastructure, invest in education, and provide financial support to both workers and high-tech businesses, allowing innovation to flourish. Crucially, the UK needs to be leading the pack in Industry 4.0 technologies.

Britain stands at a crucial crossroads; the question is, do we follow our fellow Europeans to a bright technological future, or do we sink into relative obscurity, left only with memories of a golden industrial past?

Lucy McCormick is a political writer with bylines in the Guardian, New Statesman and Tribune. She also publishes the Lucy Talks Substack

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