Macroeconomics: UK economy, IB Economics

And in the same sector, the boss of one of the UK's leading semiconductor companies has warned that without government support, many in the sector will simply move abroad. 

It's a nice sentiment, and entirely expected, but to what extent will other sectors want the same treatment, notably the car and steel industries. Such interventions rarely improve efficiency in the long-run, and also have a substantial opportunity cost, so watch this space. Might it be that the lack of a coherent industrial policy over the recent past - irrespective of the political hue of government - will come back to haunt us?

Given the recent investment in British Steel by Jingye, it is sad to report that Tata Steel, the other major UK steel producer is looking to cut jobs in Europe, and it's likely that some will go in the UK, possibly at its Port Talbot plant. 

This is a tale of comparative advantage, and the level of competitiveness in the global steel market and the consequences of triggering a negative multiplier effect, and incomes in South Wales decline.  

Reports are emerging that the UK is considering scrapping a large number of import tariffs in the vent of a no-deal Brexit. If true, this would be a remarkable move, and one which would seem to be backed by economic theory.

However, it's interesting to note the caveat that some industries would still be protected: I'm sure that the distributional issues involved would concern a number of those industries that were no longer protected, and it would give rise to accusations of favouritism.

To what extent should the government help the steel sector? The industry body, UK Steel, seems to think that without increased government help, the sector is facing a bleak future.

But surely if Economics is all about trying to ensure the efficient use of scarce resources, it makes more sense for the government to spend money on retraining steel workers, and accepting that the UK has lost its comparative advantage in the sector? 

It's an emotive subject - but I suspect that former shipbuilders, miners and others who've lost their jobs in similar circumstances might take a view.

Larry Elliott with another take on the Huawei incident - within a historic context. In the article he wonders how a country that was once a manufacturing powerhouse has been reduced to being reliant upon China for telecoms technology. 

He argues that we were naïve in assuming that China would be content to be a low-cost manufacturing hub and that the free market was always best served with minimal intervention. He contrasts China's state-controlled capitalism with the shambolic attempts to manage industrial policy in the UK. As a result, in becoming an economy dominated by finance, we've lost comparative advantage in a number of sectors. And, I guess, that then suggests another question - what happens when we lose our advantage in finance? 

"Not a lot of people know that", said Michael Caine, many moons ago. And in this instance he's correct. 

Did you know the extent to which the UK depends upon continental Europe for its electricity? You might ponder the implications of this for the UK's electricity generating capacity, and by definition its supply-side. 

Or is this simply comparative advantage in action?