Economic experts blast Chancellor for UK manufacturing decline figures ahead of Budget statement

Posted on Updated on

By John Millngton

Chancellor George Osborne came under increasing pressure today to change course ahead of his Autumn half year budget statement on Wednesday after new figures show UK manufacturing continues to decline.

The monthly Markit/CIPS survey of purchasing managers in the manufacturing industry found that any possibility of recovery remains sluggish following a nine straight months of recession.

According to the survey, “Demand from the domestic market remained subdued, while the level of new export orders continued to deteriorate.”

Companies reported weaker inflows of new business from clients operating in Europe and the US.

The manufacturing activity index rose from 47.3 in October to 49.1 in November, higher than many experts predicted.

However, the index was below the 50 mark – the point which separates expansion from contraction in the economy for the seventh consecutive month.

There was also not much joy for manufacturing workers with companies remaining reluctant to hire.

“November saw companies maintain a cost-cautious approach to hiring, purchasing and stock holding,” the report stated.

“Job losses were reported for the fourth month running, with the rate of reduction accelerating slightly since October.”

Britain has officially suffered two recessions over the past 4 years, despite the Bank of England slashing interest rates to a record low of 0.5 percent and  375 billion pounds of quantitative easing – equal to around a quarter of GDP,

And according to the Institute of Fiscal Studies (IFS), most independent forecasters expect the economy to shrink this year, grow by no more than 1% next year, and by 1.5%-2% between 2014 and 2016.

Think Tank LEAP (Left Economic Advisory Panel) Coordinator Andrew Fisher pointed out that all manner of fiscal “levers” had been pulled but had had little effect in aiding a recovery.

“Every monetary lever that could be pulled has been to try to revive the UK’s ailing manufacturing sector: sterling has been devalued, interest rates kept low, and there’s been £325bn of quantitative easing. So why does manufacturing continue to decline?”

Mr Fisher slammed the government’s over the past 30 years for lacking an industrial strategy.

“The neglect is so severe that the UK trails gets a lower proportion of GDP from manufacturing than any other G7 nation,” he added.

Professor Roger Seifert put the blame of the current mess on an obsession with “Thatcherite” economics.

“The economic model that still dominates the government and City of London thinking is the Thatcher revolution which is when finance capital took control of key positions in the economy and coloured the outlook for a generation of political leaders across the board,” he said.

And Mr Seifert cast doubt on the Chancellor’s plans for recovery, adding:
“There is no evidence that current policies, even if slightly relaxed by the Chancellor, will encourage investment in manufacturing and relevant skills; and that the current set of fiscal and monetary policies will dent the grip of the City of London on finance capital and in turn that the cold hand of finance will help release the funds held by corporations into the innovation and new businesses needed to restore growth.

Predicting a bad set of results the Chancellor attempted to appear an advocate of the squeezed middle on yesterday, telling BBC’s Andrew Marr that he would clamp down on tax avoidance at the top but also freeze benefits at the bottom.

“They’ll be extra investment in the Inland Revenue to tackle tax avoidance by multi-national companies.”

But he refused to change course on implementing austerity adding: “To turn back now…would be a complete disaster for the country.”

“If we keep our taxes less competitive then we risk more business staying out of Britain.”

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s