Are we investing too much hope in a manufacturing led recovery?

The Engineer

Talk of putting manufacturing at the heart of the economy is becoming so common these days that it’s in danger of becoming a slightly tired refrain.

It seems that rarely a week goes by without a frontline politician or prominent industry body calling for an increased emphasis on a sector that once seemed as if it had been forgotten.

Just this week, a major new report from the EEF highlighted the need for increased government support to put manufacturing at the heart of its plans for economic growth and called for help to attract and encourage the growth of larger UK engineering operations.

Meanwhile, David Cameron continues to talk up the importance of the UK’s productive economy.

All of this should – of course – be music to our ears. The Engineer has long argued that the UK’s industrial base has been neglected for too long, and that over reliance on the financial services sector was fraught with peril.

But are we now in danger of placing unrealistic expectations on the shoulders of industry by viewing manufacturing as a silver bullet, a panacea for our economic ills? And could  the undeniable economic importance of a strong technology base actually be undermined by these expectations? Putting it bluntly, are we getting a bit carried away?

Speaking at a Royal Academy of Engineering debate on manufacturing earlier this week outgoing CBI boss Richard Lambert warned that evangelising too heavily in favour of one particular sector could actually be damaging.

Arguing against the motion that ‘a manufacturing sector amounting to 20 per cent of GDP will provide the only basis for a balanced UK economy’ Lambert suggested that a strong bias in favour of manufacturing could actually undermine any economic recovery.

‘What we need to set the economy on a sustained and balanced pathway,’ he said, ‘is a government that sets the objective of macroeconomic stability above everything else so that business can plan in vest and train for the future, a government that doesn’t plonk all its chips down on one sector

It’s a sensible point. And while “macroeconomic stability” doesn’t have quite the same dramatic ring as “manufacturing renaissance” there’s plenty to be said for a balanced view. Indeed, if government sets the right conditions, all businesses, including manufacturing, will be able to grow.

With the motion defeated by a narrow majority, many of those present at the RAE debate obviously agreed.