Tagged with Manufacturing

Government intervention is vital to save steel and reverse industrial decline

Save our steelKen Clarke was pronouncing on Radio 4 several days ago that in the eighties people were calling for nationalisation to save British industry. He claimed the idea that the UK will collapse unless the government steps in has been heard before and is tired old nonsense. He seemed to think that history and the magic of free markets have proved the interventionists wrong.

So what really happened to the UK economy during the free market reign?

In 1979 as north sea oil and high interest rates inflated the value of sterling, foreign imports became cheaper. UK companies could buy coal from Poland and South Africa more cheaply. UK industries found they could import finished products from countries such as China for less than the cost of producing them here. So this must be good: cheap imports and low inflation courtesy of free markets. Continue reading →

More than platitudes needed to restore our manufacturing base

We live in a deeply divided country. The gaps between wealth and poverty have never been so pronounced.

We live in a country where financial speculators who gamble with our economy are rewarded with excessive incomes many of us could not make in a life-time.

Our economy, politics and public investment are all tailored towards maintaining an over-reliance on the financial sector of the City of London. This has led to vast regional inequality, with Britain being home to nine out of ten of Northern Europe’s poorest regions. Continue reading →

Near-universal call for industrial recovery blocked by 3 party austerity obsession

Green IndustryA YouGov poll this week says 85% want the next government to promote a stronger UK manufacturing base, with 62% believing it will give the country more economic security. They’re absolutely right of course, and that is the centrepiece of my book The State We Need: Keys to the Renaissance of Britain. But it isn’t going to happen unless there is a profound sea-change in the conventional wisdom of the 3 main political parties.

As long as economic policy is driven by austerity-first, there will almost certainly continue to be desperately low levels of investment, little or no growth or rise in output per head, no increase in living standards, all accompanies by rising national and government debt, increasing unemployment and relentless relative if not actually absolute decline. Continue reading →

The policy that dare not speak its name

The Commons debate on the budget has just finished, but one essential component in the UK economic strategy wasn’t mentioned by anyone including, mea culpa, me. The UK economy is still smaller than it was in 2008. Investment per head of the population, net of depreciation, has dropped to zero. Our manufacturing capacity is so run down, now accounting for barely 10% of our national income, that we cannot pay our way in the world: we have had a foreign payments deficit every year since 1983.

Unemployment is still 2.4 millions, but that disguises the fact that probably twice as many men and women would be able and willing to work if reasonably paid jobs were available. Both the country and the government are drifting further and further into debt. This way points only to steady national decline. The current upturn won’t escape this. It is too heavily based on enormous stoking of the money supply and hence of asset price inflation leading relentlessly to an unmanageable balance of payments gap, rising interest rates and growth grinding to a halt again. Continue reading →

Why the US-UK economic model fails the test on almost all counts

Whilst the City of London, the Stock Exchange and super-rich investors strive continually to assure us that growth is returning and that we can all soon return to business-as-usual as though the biggest financial crash for a century was just an unfortuante blip rather than integral to the core system, they never ask the really key question: do we actually want to go back to that system even if we could (which we can’t)?

After the privations of the last decade and probably of the decade to come, the great majority of the 99% would undoubtedly say No. But, they would also probably say, is there a serious alternative which is not just utopian? Well, actually, there is and it’s operating rather well and certainly much better than US-UK on almost every count. Continue reading →