The first 18 months of recovery up to mid-2011 had looked promising, particularly for manufacturers. The sector was delivering an increased share of output, providing a boost to our trade performance and investing more than the wider economy. Since then the UK economy has stalled and has seen almost no growth, let alone the investment and export focused growth that politicians and economists believe necessary for a better balanced economy. So where do we go from here?
Clearly some of our economic worries are linked to the on-going travails of the Eurozone and the corresponding lack of confidence in the UK’s economic prospects, but it is more than this. The UK has many advantages when it comes to winning this competition for investment, but we need to hear a more compelling message about the kind of economy the government is trying to create and why their future investments should be made here, rather than elsewhere.
There is much that the government has done, which we would support, starting with the firm action that has been necessary to get to grips with the public finances. There have also been some individual growth measures which have boosted industry. Welcome as these measures are, industry, however, does not see the government demonstrating the same relentless focus on growth as it has on meeting the fiscal mandate.
The government’s £1 trillion export target is a bold statement of intent, but it will only be achieved if it is supported by a clear strategy, which is seen as a priority for all parts of government. Only then will this ambition be seen as credible by business and the public.
There has also been much talk about the need for a UK ‘industrial policy’, with suggestions that government should focus on specific sectors or companies. There will be individual examples where such a course may be appropriate, but we do not believe that such an approach will deliver the growth and investment our economy needs. Instead, the government’s focus must be on creating the right environment for all businesses seeking to grow and ensuring that everything that it does supports, rather than hinders, those objectives. Only by doing so, can we hope to achieve stronger and better-balanced growth.
I believe we need an economy-wide industrial strategy, a business-plan for the hovernment, which speaks to business about the kind of economy that the coalition is trying to create and how it will be achieved. Unfortunately, the existing ‘plan for growth’ from Department for Business, Innovation and Skills (BIS) is unwieldy and has simply not been visible and influential across government. It has failed to register with business.
Industry is looking for a clear economic vision with coherence and accountability across all parts of government. This will create long-term certainty which is critical for unlocking business investment. The coalition has been right to prioritise reducing the public deficit and the fiscal mandate provides a clear road map of how it will be achieved. We now need the government to demonstrate the same urgency, commitment and clarity on growth. This will deliver the investment, exports and growth our economy desperately needs and help secure our future competitiveness.
You can find our more information about EEF’s Industrial Strategy Campaign here.
Steve Radley is a speaker at our ‘Going for growth: The new relationship between Government and the economy‘ roundtable at Labour party conference.