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The business of politics

The speed with which New Labour reverted to type could have put an MG sportscar to shame. Even as the improbable deal with Shanghai Automotive unravelled, the UK government tried to throw money at Rover, despite the fact that it had gone into administration. It was a rescue attempt, sure, but one aimed at rescuing the government's chances in the general election - and at salvaging its reputation having thrown its weight behind the John Towers bid in 2000 rather than the Alchemy proposal.

It wasn’t really supposed to be like this. New Labour burst onto the scene, not as a business-friendly party but as a business-savvy party. In April 1997, shadow Chancellor Gordon Brown launched the first-ever business manifesto – a 20-page document that spoke eloquently of macroeconomic stability, competitive markets and a tax and benefits system that rewards work and encourages enterprise.

But still we see a government that’s incapable of differentiating between a slower rate of growth in spending and a lower level of spending. Moreover, Labour has forgotten Gordon Brown’s own words from January 1997, when he said: “A mature debate on public spending should look beyond the headline figure.” Politicians will be politicians, so it’s naive to expect a mature debate on anything. But Labour’s macroeconomic management record aside, we’re tempted to conclude that the government has little concept of how business works, or how the world business environment is changing.

It’s not even enough to admit that we may not manufacture very much, but at least we are a service economy. As writer Mark Stein points out in The Spectator, US hospitals now send CAT scans to Australia and India for overnight analysis, and some 400,000 Americans are expected to have their tax returns prepared for them by accountants in India.

Back in China, the communist country that aims to be the world’s workshop, Shanghai Automotive is a $12bn-turnover company and a member of the Fortune Global 500. In declining the opportunity to pump money into Rover, it demonstrated more business sense than the UK government.

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