A speech from retiring chairman of Goldman Sachs Asset Management, Jim O’Neill kicked off the EEF National Manufacutring Conference and highlighted reason for optimism in global growth patterns.
Mr O’Neill’s opening remarks at EEF’S National Manufacturing Conference in Westminster set the scene for debate with some startling data on growth rates in emerging economies and a rebalancing of global economic power between the US and China.
Mr O’Neill highlighted that despite the current impression of global economic trauma, the last three decades have in fact shown consistent world growth at between 3.3% and 3.5%.
Throughout the last decade however O’Neill identified a disruptive shift in global production:consumtion ratios between the US and China. He attributes at least some of the current global economic crisis to this shift.
“The US was consuming too much and producing too little while China was producing too much and consuming too little prior to the crisis,” O’Neill told delegates.
There is evidence that this disparity is evening out according to Goldman Sachs’ CEO and he indicated that as this trend progressed stability in markets and visibility of opportunity should become more obvious to internationally ambitious firms.
“China should be at the heart of any international business plan,” said O’Neill as he stated that in two years – from 2010-2012 – Chinese economic growth equaled the entire value of India’s economy.
China’s economy is now valued in the region of £8.2 trillion.
O’Neill did acknowledge other rapid growth markets but urged companies to consider quality not quantity when looking at growth markets.
Encouragingly O’Neill indicated that the UK is becoming increasingly aware of the quality of growth in markets outside the EU. He showed that in the last decade UK exports to the EU have dropped by 10% – from 55% to 45%.
At the same time the UK now sends 8% of its total exports to the BRICS and ‘Mr BRIC’ – O’Neill was the one to coin the term – predicts that this will increase to 17% by the end of this decade.
“It has become very popular to quote the UK exports more the Ireland than it does to the BRICs,” observed O’Neill. “But this is no longer true.”
Mr O’Neill was introduced to EEF’s audience today as “an optimist” and he stood by this description but assured that his optimism was not without foundation.
“I commend today’s remarkable and justified focus on manufacturing,” he said. It is manufacturers which grasp global opportunities that will realise most quickly that the global economy is far more vibrant than we are often led to believe he concluded.
Speakers following Mr O’Neill included Roland Aurich, CEO Siemens UK and Northern Europe who encouraged UK manufacturers not to be too hard on the policy and business framework in the UK. It is more competitive than may here think he insisted, when compared to other European countries.
Shadow Chancellor Ed Balls and shadow business secretary Chuka Umunna also took to the stage and promised greater action on creating consistent business policy and overcoming traditional party political decision making processes.
This was welcome news to delegates but many, including Craig Naylor, managing director of precision tooling company NTR, were doubtful about its potential to become reality.
“It seems that at the same time as unity on policy and investment decisions being acknowledged as more important than ever, we see political point scoring becoming worse,” he said. “We can only hope that the aggravation of affecting change is making things worse before they get better. I only know that businesses are getting tired.”
Overall however, Mr Naylor and other delegates at EEF’s conference this morning identified a more buoyant mood this year than was experienced in 2013. “It feels like progress is being made. There is not the same sense of angry frustration as was here last year,” said Mr Naylor.