Does industrial growth really matter?
5 Mar 2014
Over the past month or so we have heard a great deal from our political leaders about how passionate they are about encouraging industrial growth in the UK.
The coalition government came into power in 2010 promising to “rebalance” the UK’s economy away from growth based on consumption to growth based on production.
After four years of hearing relatively little about this promise to restore manufacturing to the heart of the British economy, the government has now established a specialist service to encourage firms to return production to the UK from overseas.
The service, Reshore UK, was launched at the same time as Prime Minister David Cameron used his platform at the World Economic Forum in Davos, Switzerland, to deliver a speech on how he wanted Britain to become “The Reshore Nation”.
A test of how serious this government really is about supporting industrial growth is likely to come in this month’s annual Budget
He wants the UK to experience a manufacturing revival based largely on the exploitation of the UK’s shale oil and gas reserves (see this month’s issue’s cover feature).
Cameron wants Britain to emulate recent successes in the US that in the chemicals sector alone has seen 148 new projects worth more than $100 billion be announced in response to the abundant supply of cheap energy and feedstock from shale, according to data published by the American Chemistry Council last month.
However, given that even the most optimistic estimations of UK shale oil & gas put us nowhere near US output, one hopes that the Prime Minister has a Plan B for elevating manufacturing output.
A test of how serious this government really is about supporting industrial growth is likely to come in this month’s annual Budget. Trade bodies such as EEF and the Chemical Industries Association are calling on chancellor George Osborne to increase the level of compensation offered to energy intensive businesses disproportionately affected by various climate change-related policies.
If, as expected, Osborne limits action to freezing the carbon price floor, it would suggest the government has a poor understanding of the challenges facing our industries competing in a global market. For example, the UK and Europe’s refining and petrochemicals sectors are reportedly in a state of terminal decline, largely due to the US’ newfound might driven by low energy prices.
Either that, or all this talk of the importance of industry is little more than political soundbites and electioneering.
