Mandelson calls for active industrial policy

By Frank Prenesti

LONDON (Reuters) - The government should engage in a more active industrial policy to help businesses survive and emerge from the recession, Business Secretary Peter Mandelson said on Wednesday.

He added that he would use a lecture in two weeks to set out a route map of what he believed British industry wants from the government.

"We need to focus on areas of policy like technology, skills, regulation and investment and export markets - and how we set the relevant conditions for business success in these areas," he said in a speech to the Chatham House thinktank.

Financial services, one of the motors of British economic expansion in recent years, has been hard hit by the credit crunch, underlining the importance of diversification.

But manufacturing is also doing badly, shrinking at a record pace in November, according to purchasing managers' data from Markit/CIPS this week.

Mandelson said the key to achieving the right policy framework was not to abandon a commitment to the free market, but to "manage the system so as to minimise and deal with the shocks."

"Public policy, including a more active industrial policy, has, I believe, a role in ensuring that the market functions effectively as a means of maximising our economic potential in the long term - which it does not always do on its own."

However, Mandelson said that while the government was trying to support enterprise, the business community viewed these efforts as "insufficiently joined up and often overlapping."