UK manufacturing performance much poorer than it first appears
Posted by seumasach on June 13, 2012
Most disturbing of all are the long-term trends highlighted by Tuesday’s ONS report. Manufacturing is 8% below its pre-recession peak and shows no sign whatsoever of being the engine for economic rebalancing sought by ministers. In the recoveries of the 1980s and 1990s, a big fall in the value of sterling led to a strong, if temporary, rebound in manufacturing output. Despite a 25% reduction in the value of the pound since 2007, that has not happened this time. This suggests that the UK’s problems are deeply structural: there is insufficient manufacturing capacity, ageing plant and machinery and a tendency for cash-strapped firms to use a cheaper currency to increase margins on their existing export sales rather than as a way of breaking into new markets.
13th June, 2012
A combination of the crisis in the eurozone and weak domestic demand is putting the skids under the UK’s manufacturing sector once again.