Faltering fightback
25 Mar 2015
Much was made by George Osborne in last week’s budget about an apparent renaissance in UK manufacturing.
No doubt we will hear the chancellor’s claim that “Britain’s manufacturing output has grown more than four and a half times faster than it did in the entire decade before the crisis” repeated many times in the run-up to May’s general election.
However, despite Osborne’s claims of growth, recent figures suggest that market is cooling: the CBI’s latest Industrial Trends Survey reveals that order books fell in March, and the government’s own figures show that manufacturing output declined by 0.5% between December and January.
Over the past five years manufacturing has sat steadfastly at 10% of GDP
Some may put this down simply to pre-election jitters, although that given so much of our manufacturing capacity is dependent on exports to Europe, it also seems likely that the ongoing Eurozone crisis is beginning to take hold.
There are undoubtedly bright spots: Process Engineering’s April issue cover feature speaks to chemical manufacturers supplying the construction industry who, after a long and tough recession, are finally seeing an uptick in orders.
Petrochemical firms meanwhile are enjoying reduced feedstock costs due to the low price of oil.
And thanks to a range of fiscal incentives such as the Patent Box, which lowers the corporation tax on profits related to certain UK or European patents from 25% to 10%, representatives from the pharmaceutical industry are upbeat about their sector’s prospects.
However, other sectors are more downbeat: food and drink, for example, is the UK’s largest manufacturing sector and grew throughout the recession, partly due to the consumer trend of eating-in with ready-made meals rather than going to restaurants.
That trend is now reversing slightly, and at the same time major supermarkets have entered a highly aggressive prices war and have begun a process of rationalising the product ranges that they store.
This government came to power promising to “rebalance” the economy and once again make Britain a place that makes things.
However, over the past five years manufacturing has sat steadfastly at 10% of GDP.
The so-called “March of the Makers” has barely taken its first step.
It will be up to the electorate to decide which is the best party to get manufacturing moving forward – if indeed manufacturing is even a priority for voters.
