Government spending can save UK manufacturing
The government needs to stimulate the economy to help improve prospects for the manufacturing sector, writes Martin Ford, managing director of Cheshire-based independent franchised distributor, Gateway Electronic Components.
British manufacturing continues to be innovative, entrepreneurial, and at the leading edge of technology. Also it is clear that the equilibrium between manufacturing in the UK and low cost manufacturing zones overseas is changing.
There is evidence of improving prospects for UK OEMs and CEMs and that will be good for the companies in their supply chains.
However, the global economic picture is far from rosy and the uncertainty across Europe is not good for confidence; and it is confidence that will be the catalyst for a change of fortunes.
As a result the most important thing is that good companies have access to finance; that the overall tax burden is not increased; that government invests in capital infrastructure projects to provide a further stimulus for the economy.
We all know that the impact of the continuing Eurozone crisis and the government’s austerity measures have undermined industry and society as a whole; and whilst recovery will happen, some stimulus is needed.
Governments need to find investment projects that maximise the benefits of the accelerator principle.
The problem is businesses need finance to make their investments; and the banks have de-risked making it more difficult to get the finance required. What other options exist? Tax cuts, especially on VAT to increase consumer spending and bring confidence to the market from the bottom up, rather than from the top down.
If the governments of Europe could put aside their apathy, intransigence and self-interest and help their taxpayers to release more cash into the markets then growth will happen.
At the same time business leaders need to act on instinct whilst upholding prudent values in what will continue to be austere times for some while yet.
The banking system has demonstrated that unregulated greed is good for nobody; whereas controlled and affordable growth is the best investment you can make for the future.