Biden’s dirty tricks sweeteners make it tough for UK, but we’ll beat him

Biden makes it tough for UK says Ibrahim (Image: Getty) International competition for big-ticket private sector investments has never been higher. Biden’s ‘Inflation Reduction Act’, far from an attempt to curb inflation, was instead the most aggressive bid in decades to tempt industries to relocate to the United States. Car companies are receiving huge subsidies for their US operations, with US-built cars coming with a $7,500 discount to the consumer from the American taxpayer, allowing them to outcompete British or European cars in the market. A Goldman Sachs estimate suggests the US will spend $1.2tn on green subsidies, equivalent to more than a third of the UK’s entire GDP. Incentives that size are irresistible. Previously-agreed investments like Tesla’s Gigafactory and Northvolt’s battery plant were in question until Germany promised to pony up to sweeten the deal. The EU made its Temporary Crisis and Transition Framework (TCTF) so that it could ignore its own state-aid rules in order to compete with the US and deal with the energy market disruption caused by Putin’s invasion of Ukraine . Kemi Badenoch embraced compromise says Ibrahim (Image: Getty) The EU has spent €672bn on subsidies, with 77 percent going to France and Germany, with the rest of Europe picking up the scraps. The UK had seemed reluctant to hand out taxpayer’s cash to global car giants, and rightly so. In a fair economy, the winners should be those who give consumers the best products at the best price, not those who lobby for big subsidies from the taxpayer. Last week, after promising grants and a £500m upgrade to nearby infrastructure, the UK Government managed to tempt Tata Group to build a £4bn battery gigafactory in England. Trade and Business Secretary Kemi Badenoch has, in effect, embraced a compromise by promising businesses ‘targeted support for the regulatory burdens that their competitors in other countries do not face’. Rather than attempt to compete with the EU and US by outbidding them, she is aiming to make the UK a strategic long-term option. The focus will be on input energy costs and securing the supply chain for minerals required including lithium and platinum. Nissan production plant in Sunderland (Image: Getty) Independent UK free-trade policy also presents a dual benefit – cheaper imports and also better access to foreign markets. It can help our car industry compete without so flagrantly picking winners. Regulatory powers reclaimed after Brexit can help us compete on ease of business and competitiveness, rather than on the generosity of our taxpayer handouts. The strategy of course echoes Margaret Thatcher’s courting of Nissan back in the early 80’s. Indeed, Envision’s new battery plant is set up right next-door to the Nissan factory Thatcher negotiated. Post-brexit Britain needs more of this kind of thinking, and must now start building on this momentum. Unfortunately, the long-term strategy still requires short-term incentives, or else the UK will find itself left out as our competitors carve up the market for themselves. The UK is therefore having to compromise on some of our principles to get our foot in the door. But it is doing so more shrewdly, and at a better price for the taxpayer. The approach now seems to be working. With Tata’s gigafactory, Envision’s plant in Sunderland and Ford’s EV components investment in Halewood, the UK is beginning to demonstrate that it intends to stay in the automotive industry for the long haul.