How do we build confidence for industry?
The latest manufacturing statistics from the ONS and CIPS show that the UK manufacturing sector is still struggling to find that elusive recipe for consistent growth.
One month the statistics look hopeful, the next we’re plunged back down – ably assisted as always by the media doomsayers.
It seems to me that one of the key issues is lack of confidence, especially on the part of our larger companies. Many of these are sitting on considerable quantities of hard cash; and, in common with the Government, are in a position to borrow from the markets at extremely competitive interest rates.
What’s stopping them from investing is uncertainty – right now, it’s unclear what the future holds for Europe, while the phenomenal rates of growth we’ve seen in recent years in the Far East have been slowing for some months, giving investors pause for thought. And of course in the USA, although there is slow and steady growth, the presidential election has raised questions about the country’s economic priorities.
There is little that our Government can do about conditions in Europe, the Far East and North America. In the UK, however, there is a number of significant measures that it can implement that would help to boost confidence and reduce the level of uncertainty.
In particular, as I’ve argued in recent blogs, the Government must develop appropriate long term strategies and, most importantly, communicate its vision for key sectors such as manufacturing and energy. Ideally, the Government would also lead the way by investing in flagship projects at a national and regional level.
With a clear expression of Government intent, backed by a number of simple strategic measures, we might suddenly find that those companies currently sitting on stockpiles of cash are prepared to release at least some of their reserves; we may even find that investment boosts confidence still further, leading to new spending and, who knows, even economic growth! Now, wouldn’t that be an interesting phenomenon?
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