Out of date and starved of investment, we need a long-term strategy for the 21st centuryThe main purpose of airports is to allow the free movement of goods and people and not, as is too often the case in Britain, to detain them.Last week, Heathrow proved its expertise in the field of obstruction. Snow, well advertised in weather forecasts, brought the UK's biggest airport to a standstill. Thousands of passengers were stranded in departure lounges.Comparisons with refugee camps and reports of "third world scenes" were exaggerated and in poor taste. But the sense of impotent rage sweeping Heathrow expressed a deeper anxiety about Britain's declining position in the world. A well-run, world-class, hub airport serves as an economic asset and a national status symbol.Heathrow is not well run. For that, the blame lies with BAA. It seems clear now that the company's sale to Spanish construction group Ferrovial in 2006 was not in the UK's national interest. But even before that deal, BAA had a short-sighted business model that focused on turning terminals into shopping malls to milk cash from captive passengers. The new proprietors embraced that approach, diverting revenue to service massive debts. Nowhere in this equation did anyone factor in the strategic importance to Britain of having functional airports in general and the economic importance of Heathrow to the south-east in particular.It's easy to say a deal turned out badly for Britain, much harder to say what ought to have been done instead. Governments should not routinely meddle in corporate acquisitions and certainly shouldn't get into the protectionist habit of citing patriotism as the reason.But the sad fate of Heathrow exposes dilemmas for democratic governments, mandated to serve a national interest while also running an open economy in the age of globalisation.For Britain, one of the most open economies in the world, the challenge is existential. It is revealed nowhere more clearly than in our dependency on the financial services industry during the long economic boom. The country nurtured a role for itself as ringmaster for global business, reckoning that the wealth being generated would benefit the host nation regardless of who formally owned what. It worked to the extent that thousands of jobs were created and tax coffers were full.But the model proved unsustainable. All political parties are now committed to "diversification", ending our reliance on the City. But no one can agree how it will be done.The chancellor, George Osborne, has built his budget on assumptions of a near miraculous recovery in domestic manufacturing. Exports are supposed to surge, although it is not clear who will be buying. The strategy relies on faith that businesses, filled with confidence by the firm smack of budget discipline, will invest. Cuts to the public sector are supposed to re-energise the private one.It is a massive gamble on market forces coming to the rescue. Data released last week, revising recent growth down from previous estimates, suggest Mr Osborne's export-led renaissance is some way off.The government is sensitive to the charge that it has no plan B. A "strategy for growth", consisting mostly of investments in infrastructure, was announced by the prime minister shortly after the chancellor's spending review. A fund of �60m will be made available to support the expansion of wind turbines in the North Sea. A further �200m has been earmarked to develop a network of "technology innovation centres". A new, high-speed rail link between London and Birmingham is still planned, as is the Crossrail project bisecting London.Meanwhile, the "green investment bank", once a flagship policy, has been downgraded to be a much more modest fund. Plans hatched by Labour for a mass rollout of high-speed broadband, funded with a levy on fixed-line phone bills, have been replaced with a scheme that will rely more on the private sector and money from the BBC licence fee.Whether those investments can even begin to balance the effect of �81bn in spending cuts is another question. Together, they do not exactly add up to a grand plan to upgrade Britain's infrastructure so it is ready to meet the competitive challenges of the 21st-century global economy.Labour can hardly boast of having a better plan. The party is still struggling to resolve its feelings about Gordon Brown's spending habits and the needs for deficit reduction. Ed Miliband has yet to describe the brave new economy he would build, let alone explain how he would finance the transition.British politics is suffering from an intellectual paralysis caused by the credit crunch. All parties had signed up to the laissez-faire economic orthodoxies of globalisation. That creed is utterly discredited. It became clear in 2008 that government has a more vital role to play ? it saved the day when markets failed. But beyond emergency bailouts, no one can agree where the new boundaries of state intervention might lie.Towards the end of Labour's period in office, Lord Mandelson began to develop a concept of the "strategic state" that would foster competitive business but not offend market principles. It was an intriguing idea, although it was never clear how it would work in practice ? or how it was really distinct from the old Whitehall attempts at "picking winners".Economic thinking in the current government, meanwhile, seems characterised by residual Thatcherite faith in the superiority of markets, coupled with a nagging intuition that markets are not enough.George Osborne likes to repeat that Britain is "open for business". No one is seriously advocating that it should be closed. But there is a little too much in the government's approach that suggests a return to the pre-crisis business model.The danger then is that Britain's economy will succumb to a kind of Heathrow syndrome, looking more and more like its main airport: out of date, starved of investment, lacking a long-term strategy, weighed down with debt, reliant on shopping to stay afloat. In that sense, last week's scenes of a nation bedding down in a tatty departure lounge felt ominous and poignant. The challenge for all parties is to evoke a more inspiring vision of 21st-century Britain.HeathrowLiberal-Conservative coalitionEconomic growth (GDP)Economic policyguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
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