By Max Clarke
As the service sector remained in the doldrums and the economic stagnation persisted, one sector of the embattled UK economy remained strong.
Emerging from the recession as a shining light in the enveloping economic darkness, the UK’s manufacturing sector continued to grow, buoyed in part by the crash in the value of sterling. After a deep recession, followed by economic stagnation, the UK’s manufacturing sector had remained the world’s 6th largest in terms of value.
Coalition politicians leapt on this, launching a £50 million Growth Review Framework for Advanced Manufacturing in December in a bid to hasten a manufacturing recovery, before Nick Clegg, Vince Cable and Mark Prisk launched the Advanced Manufacturing Summit early in the new year in an attempt to further nurture the important sector.
Said Business Minister mark Prisk: “The review into Advanced Manufacturing will see the Government align with industry in our shared ambition to put manufacturing industries on a more solid footing than in the past decade.”
As the Government progressively implemented their deficit reduction policy, job losses and service sector uncertainty, matched by inflation and soaring commodity and energy prices, saw consumer spending power drop. High streets suffered and any prospects of a retail-led recovery faded, again placing all hopes in a recovery on the manufacturing sector.
But by April, the pace of manufacturing began to lull. Rising commodities forced manufacturers to pass on the prices on to wholesalers and factory gate inflation crept up, negating the boon from the competitive sterling.
“Production costs have jumped markedly during the last three months, rocketing ahead after a full year of already rapid cost inflation. This is unsurprising given the recent surge in oil and other commodity prices,” commented the CBI’s John Cridland.
Other cracks in the UK’s vital manufacturing sector began to emerge, after a survey of school children revealed that the majority considered the sector ‘boring’, prompting concerns of a worsening skills shortage.
A series of high profile industry closures and downsizings have also raised concern about the long term health of the sector, including 1400 redundancies at defence giant, BAE Systems; 2400 high skilled R&D job losses at Pfizer’s UK site and, most recently, up to 1500 jobs at Bombardier’s Derby plant.
Adding to this increasingly alarming picture came figures from the ONS that revealed that the manufacturing sector was responsible for 39% of job losses in the Midlands, resulting in a fierce backlash from trades unions who blasted the Government, blaming the losses on the cuts agenda:
“The UK needs a proper strategy for manufacturing with interventionist policies from the government rather than just hoping things will get better,” said Unite union’s manufacturing secretary, Tony Burke. “There is no plan A or plan B for manufacturing.“
Most recently, figures published by the Office for National Statistics showed a sharp decline in April, followed by modest gains in May. Unions again saw the weakened performance as vindication of their anti-cuts agenda, though business organisations remained more balanced.
“While the recovery is modest,“ said the BCC’s David Kern, “the manufacturing output figures show there is no need for the government to abandon its current fiscal plans. However, the economic situation remains uncertain and everything must be done to ensure that there are no setbacks in the months ahead. The government must be more forceful in implementing growth-enhancing policies and in deregulating the labour market. On its part, the MPC must postpone interest rate increases at least until the final three months of the year."
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