During Wednesday’s Budget debate we can expect a good deal of self-congratulation about the healthy state of the economy, but in the Sunday Times David Smith points out some of the figures that might not feature prominently in the Chancellor’s speech:
Britain’s productivity (output per worker) is 11% below the Group of Seven average. The gap is even greater in output per hour.
The latest trade deficit in goods was £57.9 billion, nearly five times the £12.3 billion figure for 1997. The deficit in goods and services was £39.7 billion. In 1997 there was a small surplus of £1 billion.
The Engineering Employers’ Federation has been counting the number of manufacturing jobs lost since Labour took office. It is expected to be about the million mark this week.
Comments (1)
The counter argument to this, of course, is that there's nothing special about manufacturing and we shouldn't get hung up about it. We are also told that the trend to services will replace manufacturing and that this is good for us because we are better at services and that the prices of services in the world market are going up whilst those of manufactured goods are going down (i.e an improvement in the "terms of trade").
Only one part of this is correct - there's nothing special about manufacturing. However, two thirds of our exports are of manufactured goods and therefore the state of manufacturing output (as opposed to employment) is highly indicative of our competitive position in the world. Services exports have not, and are not, replacing manufacturing output to anything like the extent required and this tells you that we are becoming less competitive.
Indeed we have had a huge transfer of jobs into areas which don't have to compete internationally and a huge loss from areas which do. Whilst all this happens, the trade deficit grows and grows and we pay ourselves with money effectively borrowed from the rest of the world.
How often does Gordon Brown acknowledge the fact that in his supposedly successful economy our industrial output has not increased at all, in contrast to every other G* country? Strangely, he never mentions this.
Posted by HJ | March 15, 2005 4:45 PM
Posted on March 15, 2005 16:45