sidcow Posted May 14, 2023 VT Supporter Share Posted May 14, 2023 (edited) I mentioned in the US Politics Thread about the Inflation Reduction Act and that it is sucking investment away from the UK. And the EU response is equally sucking investment away from the UK. This report lays it out. It seems the world is now imposing protectionist policies that we are just unwilling and unable to do. We'll throw a bit of money on science (where we tend to invent but not "do") and probably reduce red tape to help out banks and financial services. Great for London but not so much for the rest of the country and the ordinary man. Brexit has left us enormously exposed to global forces and the Jam tomorrow of Brexit opportunities look like so much hot air and zero substance. My question is what is our future. How to we pay our way in the world in the future to the benefit of the whole country? At a time when the rest of the world seems to be onshoring manufacturing we seem to be missing the boat. https://www.bbc.co.uk/news/business-65573775 Is the UK too late to beat the US in the global trade war? Quote In the dusty cornfields of West Kentucky, an area which had long ago been abandoned as an industrial site is once again coming to life. Quote It has been drawn here by US incentives. The country is spending billions in new subsidies via loans and tax breaks targeted at green energy and vehicles. Half of Ascend's initial $1bn build costs were covered by the US government under this new scheme, known as the Inflation Reduction Act (IRA). The move is part of tectonic shifts emerging in where the world makes everything. It could spark a global trade war between Western allies, as the EU responds to the US plans in kind. Quote It is about those in the West refusing to bow to what was thought to be the inevitable ascent of China to being the world's biggest economy. Quote In Britain, it means there are choices to be made. A government preoccupied with Brexit and domestic political turmoil may have missed the start of a carve-up of future industries between giant trading blocs coming out of the pandemic. The presumption that has dominated British politics for nearly half a century that governments do not "pick winners" in industry, is being severely tested by the fact that most G7 allies are doing just that, because of the push to reduce carbon emissions to net zero, post pandemic supply chain concerns and a wish to decouple from China. Quote "The risk is that we're standing on the side lines while these big blocks compete… playing the game. I'm not sure that anybody [in UK politics] has calibrated the scale of change that that IRA and the Chips Act and the rest of it is going to have." Quote It was a play on the efforts to "reshore" domestic production in critical industries, but including allies or "friends" in these rebuilt supply chains. The French were cock-a-hoop when President Biden expanded upon the plan. The year before, Le Maire had been privately shocked when his officials reported that the supply chain for European electric car batteries was 85% dependent on China. For solar panels it was 95%. Quote At a rally to promote his push in January President Biden told car workers: "You see I'm getting criticised internationally for focussing too much on America. To Hell with that. Where is it written that America can't lead the world in manufacturing again?" Insiders say that although the focus is on green industries, the strategy is about supporting middle income jobs and wages in left behind areas - the regions where US presidential elections are decided. Quote But this is the crux of the dilemma. The US is engaged in a massive atypical economic intervention designed to change the map of global production, address left behind areas and the net zero challenge as well as reducing reliance on China. It is here to stay and other blocs, especially the EU, will respond and are already fast-tracking some subsidies. So, the question is should the UK follow suit, and can it afford to follow suit? There are fears in industry the scale of the intervention elsewhere means that it is already too late. Edited May 14, 2023 by sidcow 1 Link to comment Share on other sites More sharing options...
sidcow Posted June 7, 2023 Author VT Supporter Share Posted June 7, 2023 Interestingly Sunak has said he thinks protectionist policies like the IRA are a "zero sum gain" but Labour will propose something similwr We are currently fiddling whilst Rome Burns here. https://www.bbc.co.uk/news/business-65573775 Is the UK too late to beat the US in the global trade war? Quote In the dusty cornfields of West Kentucky, an area which had long ago been abandoned as an industrial site is once again coming to life. US manufacturer Ascend Elements has chosen the site to build a factory for electric car batteries made from recycled ones - an industry previously almost entirely based in China. Quote It has been drawn here by US incentives. The country is spending billions in new subsidies via loans and tax breaks targeted at green energy and vehicles. Half of Ascend's initial $1bn build costs were covered by the US government under this new scheme, known as the Inflation Reduction Act (IRA). The move is part of tectonic shifts emerging in where the world makes everything. It could spark a global trade war between Western allies, as the EU responds to the US plans in kind. Spoiler In Britain, it means there are choices to be made. A government preoccupied with Brexit and domestic political turmoil may have missed the start of a carve-up of future industries between giant trading blocs coming out of the pandemic. The presumption that has dominated British politics for nearly half a century that governments do not "pick winners" in industry, is being severely tested by the fact that most G7 allies are doing just that, because of the push to reduce carbon emissions to net zero, post pandemic supply chain concerns and a wish to decouple from China. Quote John Neil, the boss of major UK manufacturing firm Unipart, says the combination of incentives offered by the US and similar government and regional plans could amount to $10 trillion - five times the size of the entire UK economy. "The risk is that we're standing on the side lines while these big blocks compete… playing the game. I'm not sure that anybody [in UK politics] has calibrated the scale of change that that IRA and the Chips Act and the rest of it is going to have." Link to comment Share on other sites More sharing options...
Popular Post tinker Posted June 7, 2023 VT Supporter Popular Post Share Posted June 7, 2023 If we can sort cheap electricity generation out, tidal or wave power, then the battery manufacturers will come. The UK, an island, has some of the biggest tidal ranges in the world, we have a distinct advantage over land locked countries but we don't have leaders with the vision or drive to improve the UK in the long term. 7 Link to comment Share on other sites More sharing options...
blandy Posted June 7, 2023 Moderator Share Posted June 7, 2023 1 hour ago, tinker said: If we can sort cheap electricity generation out, tidal or wave power, then the battery manufacturers will come. The UK, an island, has some of the biggest tidal ranges in the world, we have a distinct advantage over land locked countries but we don't have leaders with the vision or drive to improve the UK in the long term. Those 2 things seem unrelated. I’m not saying no manufacturers will set up here, but that the means by which electricity is generated isn’t going to be a factor of significance in decisions on where to locate a factory making batteries. Batteries made in the uk will be subject to trade tariffs when exported to the (much bigger) EU & US markets, for example. 1 Link to comment Share on other sites More sharing options...
sidcow Posted June 7, 2023 Author VT Supporter Share Posted June 7, 2023 If we want battery firms here, and therefore save the British Car Industry, we're going to have to pay massive subsidies. Something they failed to do to support Britishvolt Link to comment Share on other sites More sharing options...
tinker Posted June 7, 2023 VT Supporter Share Posted June 7, 2023 2 hours ago, blandy said: Those 2 things seem unrelated. I’m not saying no manufacturers will set up here, but that the means by which electricity is generated isn’t going to be a factor of significance in decisions on where to locate a factory making batteries. Batteries made in the uk will be subject to trade tariffs when exported to the (much bigger) EU & US markets, for example. Battery production uses massive amounts of electricity. This drops the price of production. Link to comment Share on other sites More sharing options...
blandy Posted June 7, 2023 Moderator Share Posted June 7, 2023 25 minutes ago, tinker said: This drops the price of production. It could do, but I mean it doesn't in the UK - it would require a change in the pricing mechanism, which is currently linked to the price of Gas. Link to comment Share on other sites More sharing options...
tonyh29 Posted June 7, 2023 Share Posted June 7, 2023 2 hours ago, sidcow said: If we want battery firms here, and therefore save the British Car Industry, we're going to have to pay massive subsidies. Something they failed to do to support Britishvolt Britishvolt didn't even have a working prototype of the technology and was haemorrhaging money on start-up costs , that may or may not have also included Hospitality at events , private jet , Mansions etc .. In any other circumstances had the government backed them they would have been accused of wasting tax payers money that could have been better spent on x number of nurses Agreed , the government needs to support battery firms ..just not that particular one Link to comment Share on other sites More sharing options...
sidcow Posted June 7, 2023 Author VT Supporter Share Posted June 7, 2023 9 minutes ago, tonyh29 said: Britishvolt didn't even have a working prototype of the technology and was haemorrhaging money on start-up costs , that may or may not have also included Hospitality at events , private jet , Mansions etc .. In any other circumstances had the government backed them they would have been accused of wasting tax payers money that could have been better spent on x number of nurses Agreed , the government needs to support battery firms ..just not that particular one If so they shouldn't have let it go as far as it did? They'd already pumped some money in and the premises construction was already started. Shouldn't be doing that if there is literally no intellectual property in existence. Link to comment Share on other sites More sharing options...
tonyh29 Posted June 7, 2023 Share Posted June 7, 2023 28 minutes ago, sidcow said: If so they shouldn't have let it go as far as it did? They'd already pumped some money in and the premises construction was already started. Shouldn't be doing that if there is literally no intellectual property in existence. Far as I know ( which admittedly isn't a lot in this instance ) the government promised them grants IF certain criteria were met .. they never were , thus the government didn't give them any funding... it was private investors 1 Link to comment Share on other sites More sharing options...
sidcow Posted June 7, 2023 Author VT Supporter Share Posted June 7, 2023 59 minutes ago, tonyh29 said: Far as I know ( which admittedly isn't a lot in this instance ) the government promised them grants IF certain criteria were met .. they never were , thus the government didn't give them any funding... it was private investors Nevertheless. It's now been taken over by an Australian company who seem quite capable of getting it done, but focusing on non car batteries. Link to comment Share on other sites More sharing options...
tinker Posted June 7, 2023 VT Supporter Share Posted June 7, 2023 (edited) 3 hours ago, blandy said: It could do, but I mean it doesn't in the UK - it would require a change in the pricing mechanism, which is currently linked to the price of Gas. If we can produce more power from cheaper sources then the link to gas would be broken as we wouldn't need to use it at all, in the order of merit. https://www.instituteforgovernment.org.uk/article/explainer/electricity-market#:~:text=There are two markets for,– buy electricity from generators). Edited June 7, 2023 by tinker Link to comment Share on other sites More sharing options...
blandy Posted June 7, 2023 Moderator Share Posted June 7, 2023 1 hour ago, tinker said: If we can produce more power from cheaper sources then the link to gas would be broken as we wouldn't need to use it at all, in the order of merit. could - as I said above. Logically of course it absolutely should happen. The pricing mechanism is insane and not fit for purpose. But whatever pricing mechanism is put in place, things like subsidies and grants and potential export markets (and tariffs and barriers) are likely to be much more significant factors in where companies set up their factories. Since brexit, the trend has been for more businesses to base themselves in the EU, rather than the UK. Then there's places like China and India with much cheaper labour costs. Just because it's windy and wavey on these islands doesn't mean people are going to rush here to make battery factories. Much more is necessary. It is an opportunity, but our government is one which regularly squanders and sabotages such opportunities. 2 Link to comment Share on other sites More sharing options...
MakemineVanilla Posted June 7, 2023 Share Posted June 7, 2023 5 hours ago, blandy said: It could do, but I mean it doesn't in the UK - it would require a change in the pricing mechanism, which is currently linked to the price of Gas. I seem to remember that they had an aluminium smelter built in Scotland next to a hydro-electric dam*; so couldn't that do the job? *Petrol heads will know that the aluminium was used to make Coventry Climax Hillman Imp engines. Link to comment Share on other sites More sharing options...
Recommended Posts