‘Driving force’ going off the road?

UK manufacturing is heading in the wrong direction, our balance of payments still on the critical list, exports are down, deflation is on the horizon and City pessimists warn of a another financial crash.

While Osborne thinks he’s been ‘fixing the roof’ in the economic sunshine of a recovery, the torrential floods of reality have been washing away our manufacturing base. UK manufacturing – the driving force of our economy – is now in trouble with output dropping 1.2 per cent between November 2014 and November 2015.

And the latest figures also show that other sectors of production started to falter at the end of 2015. It’s the biggest slump in industrial output for three years, the last Osborne economic downturn.

The next construction figures – that sector slumped by 2.2 per cent after Osborne boasted he was a builder at last year’s Tory conference – are out this week and could point to worse problems.

But before he was ‘George the Builder’, he had been leading the ‘march of the makers’ in manufacturing.

That’s back in recession but interesting comments from the office for national statistics destroys Osborne’s march of the makers rhetoric, and claims of an economic miracle which has sparked a recovery.

The ONS points out: “Despite the growth seen in production and manufacturing since the economy’s downturn, in Quarter 3 (July to Sep) 2015, output remains 9.2 per cent and 6.4 per cent below Quarter 1 (Jan to Mar) 2008 levels.”

A translation of that is that production and manufacturing output levels are still well below where they were before the financial crash.

It’s all adding up to an ‘Osborne Sour’, a new toxic economic cocktail that no one likes. He is close to being a Chancellor who has created two economic downturns, a decade of austerity cuts and a huge collection of missed targets.

His promise to boost exports has seen the worst balance of payments figures – what we sell abroad compared to what we buy from abroad – since the aftermath of the Napoleonic wars. Economic growth is now being largely driven by population rises and household spending, fuelled by more record levels of debt.

Reverse gear

Tony Burke Unite assistant general secretary hit out over the manufacturing figures. He told UNITElive, “George Osborne’s claim that he was leading the ‘march of the makers’ really is absurd. That was abandoned long ago. He’s put manufacturing into reverse gear while patting himself on the back and saying what a good job he is doing.

“His export drive has led to the worst balance between what we sell abroad and what we buy from abroad that we have ever seen. His promise to rebalance the economy with genuine growth has instead led to growth being pumped up by consumer borrowing, now reaching huge levels.

“Last week we saw the Chancellor getting his excuses in early – it was everybody else’s fault but his and he warned that we should strap ourselves in for a rough ride.

“There is also a real danger that we will see further attacks on highly skilled and relatively well paid workforces. Manufacturing and industry are huge wealth creators but they need help and nurturing for the long-term.

“Our country cannot afford to lose well paid highly skilled jobs and see them replaced by minimum wage jobs in the service sector. We need a genuine march of the makers, not just the march of the coffee shops and sandwich makers.

“Tory government  ‘help’ for the steel industry saw production fall by a third, much of it in the north of England, his so-called ‘Northern Powerhouse’. The lack of a coherent industrial and manufacturing strategy is exposing the UK’s manufacturing sector to the whims of global headwinds and risks hollowing out skills and jobs in a key sector of our nation’s economy.

“As we saw with closure of the steel works in Redcar, the government’s complacent laissez faire approach damages communities and strips out decent well paid jobs from the economy.

“With steel communities across the UK facing uncertainty and as the storm clouds grow in the global economy we urge the government to adopt an active industrial strategy with steel at its heart.

“Now is the time for the government to follow the example of countries like Germany who actively support their industries. It’s time for the government to put its words on procurement and the dumping of cheap steel into action to save our steel and boost manufacturing.”

Back our skilled workers

Ian Waddell, national officer for aerospace agrees. “Aerospace is at the cutting edge of new technology with a highly skilled, relatively well paid workforce. UK aerospace must get the same backing that other countries give their industries,” he believes.

“The key is making sure we keep our highly skilled, well-trained workforces together whatever turbulence there might be either in the UK or in the global economy.

“Like steel, aerospace is a strategic industry and we need government actively working with the industry and unions, rather than standing on the sidelines watching jobs disappear.”

No one can dispute the importance of car manufacturing to the UK ecomony. Unite national officer for the automotive sector, Roger Maddison, believes a coherent strategy from government is absolutely paramount.

“We’ve been a relative success story although we were badly hit by the financial crisis and its aftermath,” reports Maddison. “We’re central to manufacturing and as a very competitive industry we rely on research and development to drive success.

“It is a very complex industry, and we are trying to recover some of the supply chain work back to the UK which was lost and which could create more skilled jobs.

“We are part of a complex industrial eco-system and, for example, the crushing of the UK steel industry could impact on the automotive industries and make securing the supply chain work in the UK more difficult.

“We’re crying out for a coherent industrial strategy from our government. Manufacturing is still critical to our economy, every other country has a strategy to nurture and assist economic growth in key strategic industries,” he added.

While no one knows what 2016 will actually bring, its first casualty may be the rose tinted future on which Osborne based his autumn statement. Get ready for more missed targets and, perhaps, for bad news this week in the construction industry.

And already major city analysts are predicting another financial crash. While such predictions are not new – and a broken clock is correct twice a day – it may be the year when the wheels come off Osborne’s economic wagon.