MP leads calls for Britain’s economy to meet the needs of the many not the few...
BRITAIN needs an economy which values long-term investments such as manufacturing plants rather than making a quick buck for the financial sector, according to a Newcastle MP.
Chi Onwurah, Labour MP for Newcastle Central, set out Labour’s vision for a new industrial strategy in the Commons.
She said Labour wanted to build a ”highwage, high-skill, high-productivity economy”.
But the present economy - not just in the UK but in other advanced economies too had been taken over by what some economists call “financialisation”, she said.
This is an economy that serves the need of the finance sector, focusing on shortterm profits.
Ms Onwurah highlighted the work of Italian and American economist Mariana Mazzucato, who set out two problems with this system.
She said: “The first is the way in which the financial sector has stopped resourcing the real economy – instead of investing in companies which produce ‘stuff,’ finance is financing finance.
“Why lend money for a manufacturing plant which may take years to yield a return and can’t easily be sold on when you can make a bet on some options hedged with other options and virtually guarantee a return in a few weeks? With so much financial engineering demanding investment, real engineering doesn’t stand a chance.
“The second is the financialisation of the real economy with industry driven by short-term returns.
“This results in less reinvestment of profits and rising burdens of debt which, in a vicious cycle, makes industry even more driven by short-term considerations.”
Ms Onwurah said Labour wanted to ensure every part of the country had an “innovative” economy. She said: “Let me take just one example, a city which has contributed so much to the country’s innovation economy - Cambridge. With a population of 285,000 it has as many private R&D jobs as the whole of the North which has 50 times more people.”