Manufacturing output in the UK fell by 1.5% in January 2013, some suggest the its all the fault of the snow. Well I suppose that some people (small children) believe fairies live at the bottom of the garden and then there are those that believe the earth is flat.
Without wanting to break shocking news to the unsuspecting but you know it does actually snow in winter in the UK. Not everywhere but most places will get a bit and I really don’t think it comes as a huge surprise to industry who probably have contingencies anyhow. No, I think its fair to say the economy shrunk and manufacturing particularly did badly. In fact the whole UK economy reduced by 0.3% in 2012 and since manufacturing is now only a fraction of the overall economy a 1.5% reduction doesn’t seem quite as dramatic when seen in context.
The UK manufacturing decline is only a continuation from the 1980’s and I’m sure that eventually like water it’ll find a level and pretty much balance out at that. My view is that manufacturing will eventually polarize; high-end, hi-tech stuff, aerospace, and outer-space kinda stuff and medical at one end then there’ll be the kind of manufacturing that wont travel, low-end, very low price and low volumes at the other.
The UK it has to be said is all about services; financial and education being the most obvious, but I’m sure there are plenty more I could mention. That being the case then it shouldn’t come as any surprise when the UK struggles with recessionary forces because to put it simply the UK will only do well when the people it’s selling to are doing well. Unless the UK starts making things, things that people want and at a price that people will buy at; well manufacturing generally aint coming back, not ever!
I’m not suggesting for a moment that the loss of manufacturing should be mourned (even though I work within the manufacturing sector), no I think companies in the UK should be outsourcing manufacturing to emerging economies. Its the best way to spread the wealth, and they will buy what we have to sell. In fact I’d go further and say that the UK should be investing in underdeveloped economies for the best advantage globally.
Going slightly off-subject (but I just cant resist on this one) those who say stop the Foreign Aid programs and spend the money at ‘home’, to those I say that’s just soooooo short-sighted. The world is inter-connected, one way or the other we are all linked and what I do today does affect others, its a ripple kind of thing. The ripples may take some time coming back, but they will come back. The UK is still a very rich place comparatively speaking, so stop being peevish and stop with the navel gazing.
Right, back to subject; Further signs that UK exporters are finding life tough emerged in separate figures on the UK’s trade and goods deficit, which narrowed to £2.4 bn in January from £2.8 bn the previous month. Total exports in goods decreased by £900 mn (3.5%) to £24.4 bn, while lower consumption meant total imports fell by £1.4bn (4.2%) to £32.6 bn.
In short the UK is spending more than its selling. A recession? you bet!
I watch the news, read the news on the internet (I don’t like the printed press) and I’m not convinced that the UK ever got out of recession, I think those in the know are just basically conning us all, the UK continues to bump along (at the bottom, or is there further to drop I wonder?). My honest opinion is that we never got out of the first recession, never-mind in and then out of a second with a third well on the way.
What the UK really should concentrate on is doing what it does really well, I mean really, really, really well. Make sure that what it does is what people want as well.
If they want to get back into manufacturing, well they are going to have to invest heavily in technology (the Brits wont work for low-pay even though they think that they are already). But I don’t countenance this, the Brits are just too far behind, stick to the knitting is what I say.
Innovation on the other hand, now that should be encouraged. Spend like mad on innovation and then keep it in the UK, and then sell it to the world.
Innovation + Services = route out of recession.