Incoherent “mish mash” verging on “codswallop” is how plans to rebalance the economy have been described by Andrew Tyrie, Chairman of the Commons Treasury Select committee according to an article in the Financial Times on Bank Holiday Monday. “I don’t think ministers have used the term with sufficient precision” said the no nonsense MP for Chichester. I like Andrew Tyrie, he gained a formidable reputation following his aggressive cross-questioning of the bank bosses during the banking crisis and has twice been voted The Spectator’s back bencher of the year.
We used video clips of Andrew at the pro.manchester Business Conference in March and hope to have the real version with us next year. “Rebalancing” has entered the lexicon of the coalition along with the “Big Society”. Margaret Thatcher, famously denounced the existence of society of any dimension, it would be interesting to note what the Baroness would make of this novel trope. As for “rebalancing” the economy and the “march of the makers”, this really is rhetoric from the debating room rather than a policy for action.
Roger Bootle of Capital Economics has suggested that rebalancing was acceptable rhetoric, “The idea of lifting manufacturing from under 12% of the economy to 15% in a few years was “plausible”. Blimey, that’s a 30% increase in output from a sector which is still recovering from a near 20% down turn during the recession.
As for march of the makers the government places great emphasis on the Dyson ‘Ingenious Britain’ report, this from a man who famously marched all of his makers to Asia to minimise production costs.
In 1970, manufacturing accounted for almost 30% of UK GDP. It was the year in which I graduated from LSE and joined almost one hundred graduates on an eighteen month management training scheme with Tube Investments, one of the largest manufacturing conglomerates in the UK.
The initial three months were spent at Oldbury Technical College in the West Midlands. We did welding, metal work, patent making and casting as well as a stream of management training classes. Each week, we would visit a company within the group, British Aluminium, Bacofoil, Raleigh Bicycles, Creda cookers, Stainless Steel manufacturers, Exhaust manufacturers, tube makers. There can be nothing more dramatic than the Pilger process, aluminium extrusion or steel production to impress a social scientist graduate.
One of the highlights of the three months was a visit to Round Oak Steel works, where we did see steel being poured in what is now probably the lingerie section of Marks and Spencers in the Merry Hill Shopping centre. So many of the Tube Investment names and processes have disappeared from the UK.
Manufacturing now accounts for around 11% of output compared to almost 30% in 1970. Manufacturing is experiencing above trend growth as it always does at this stage in the cycle. It’s like falling off a cliff and recovering from a coma, a recovery of sorts but still a long way off the top. An industry struggling to find its feet again is a rebalancing of sorts, but it is more like a prize fighter staggering to his feet after a near knock out punch. It is rebalancing George but not as you mean it. That's verging on codswallop.
Financial Times : UK Economy Plans branded incoherent 30th June 2011
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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University.
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