Brown misfigures in putting blame on manufacturers

It was easy for Gordon Brown to blame the recent job losses at Rover not on the crippling strength of sterling, but on a wider failure throughout industry to increase productivity. Few in manufacturing gave that explanation much credence. Now we have evidence. Analysis by the London Business School suggests that the official statistics on […]

It was easy for Gordon Brown to blame the recent job losses at Rover not on the crippling strength of sterling, but on a wider failure throughout industry to increase productivity. Few in manufacturing gave that explanation much credence. Now we have evidence.

Analysis by the London Business School suggests that the official statistics on which Brown’s claim was based have seriously underestimated manufacturing productivity improvements over a number of years.

At the same time, research by the CBI shows that flexibility in the UK workforce continues to grow.

The EEF’s Graham Mackenzie and British Steel chairman Brian Moffat, men not easily roused to write trenchant letters of criticism to the Financial Times, have called on the Government to take industry’s concerns more seriously, backed by a wave of indignation from across manufacturing. They are fully justified.

It is not a question of wounded pride. If the LBS is right, then, as the EEF argues on this page, the Bank of England Monetary Policy Committee’s concerns that rising earnings are threatening the Government’s inflation target are unfounded. Its decisions to raise interest rates have been made on erroneous information and the pain caused by the strong pound, slashing exports and bringing manufacturing to its knees, has been unnecessary.

With another batch of surveys this week showing prospects for industry at their gloomiest since the recession of 1980, there is no time to lose. The DTI and the Treasury should examine the LBS’s claims and produce a more reliable set of figures, as a matter of urgency.