Growth, what growth?

2 min read

For almost two and half years politicians have been more or less united in their eagerness to say positive things about manufacturing.

Way back in January 2009, in the teeth of the downturn, the then business secretary Peter Mandelson called for “less financial engineering and more real engineering”. Fast forward  29 months and Lord Mandelson’s successor Vince Cable can regularly be found uttering similar statements.

Along with many others, The Engineer has welcomed this apparent recognition that industry could and should be an engine for economic growth. But with the UK’s latest economic figures suggesting that growth has all but stalled it’s a mantra that’s beginning to wear a little thin.

Economic growth slowed to just 0.2 per cent in the last quarter -  and with manufacturing apparently stagnating there are few signs of the long hoped for rebalancing of the economy. Indeed, the vilified financial services sector that triggered the recession in the first place appears to be recovering fastest.

Government has tried to present the news as positive, with both Cameron and Osborne hailing the modest growth as evidence that the ‘UK is a safe haven in a storm’. But shadow Chancellor Ed Balls, along with almost every major newspaper, poured scorn on this suggestion, arguing that January’s VAT rise and deep cuts in public spending have effectively choked off the economy.

The office of national statistics has attempted to sweeten the pill by suggesting that the Royal Wedding may have had a downward impact. Although, perhaps mindful of the scorn poured on him when he blamed bad economic news on last year’s snow, Osborne has shied away from blaming the royal family. Once again, the mere fact that an extra bank holiday can even be entertained as having a significant economic impact is a reminder of the parlous state of the economy. 

There’s clearly no magic bullet, but there is still much that could be done to shore up the UK’s manufacturing industry. Government Initiatives such as the current Red Tape Challenge, which is asking manufacturers for suggestions on which burdensome regulations to change or cut , are a step in the right direction, but more needs to be done. Failure to ensure anything less than a continued and unrelenting focus on creating the right conditions for the UK’s manufacturing businesses to prosper will be disastrous for the future of the UK economy.

In the meantime the message from everyone from the CBI to manufacturers’ organisation EEF is “sit tight”. The CBI is predicting some economic bounce-back in the autumn, while EEF has identified a recent surge in manufacturing activity that could make this quarter’s figures less depressing. Let’s just hope the fragile recovery isn’t derailed by weather or weddings.