Wanted: new industry policy to support UK manufacturing
Today’s report from the Chartered Institute of Purchasing and Supply, showing that British manufacturing is shrinking at its fastest rate since records began, is more evidence, if more were needed, of the challenges facing the British economy. Levels of output, new orders and employment in the manufacturing sector recorded unprecedented declines last month, according to the report.
That will hit ordinary people, not least those working in manufacturing, creating more economic uncertainty and higher unemployment. The need for an interest rate cut, when the Monetary Policy Committee meets next week, is overwhelming. Yet a look at manufacturing from first principles might also be worthwhile.
Britain has been good at making things, simply adding value to raw materials, ever since the industrial revolution over two hundred years ago. That hasn’t changed, in spite of some voices saying that our days as a manufacturing nation are over.
However, three basic questions to be asked are: Who is buying? What are they buying? And can we make it here?
We hear lots about the prowess of China as a manufacturing nation, yet the relationship need not all be one way. China is getting richer, its economic growth rates remain healthy (which is no mean feat in current circumstances) and its growing middle class has a taste for western style manufactured goods, that cannot be produced at home. Germany does well from its exports, to China and elsewhere. What about an export led manufacturing strategy for the UK?
Furthermore, in the UK, as everywhere, we have more competitive advantage in some industries than in others. The TUC has long argued for an industrial policy that spots our strengths and targets them. Our forthcoming report identifying growth sectors of the economy and setting out what needs to be done to support them will be available soon. We hope that BERR and the Treasury will act on it.