Manufacturers’ organisation EEF challenged the government to end its inconsistent approach to growth, by outlining a clearer plan for the future of the economy and putting in place a long-term industrial strategy to deliver it.
In a new report, The Route to Growth: a new approach to Industrial Strategy, EEF argued that progress towards a better-balanced economy has stalled because the government has yet to demonstrate the same relentless and clear-sighted approach to growth that it has done on reducing the deficit.
EEF’s chief executive Terry Scuoler said: “Business is seeking certainty to invest, but too often it is left with the impression that government is responding to events, rather than leading on growth. This will not change until government is clear about its economic ambitions and sets out some simple benchmarks to measure progress – just as on deficit reduction.
“To do this we need a new economy-wide industrial strategy for achieving stronger, better-balanced growth.”
In its report EEF highlighted the consensus that has emerged on the need for a new UK economic model, based on trade and investment rather than on consumption and borrowing. The on-going eurozone crisis and continuing uncertainty in the UK economy, however, mean that that this new economic model remains a long way off.
While the government has made significant progress on meeting its fiscal mandate, the trade association is critical of its current approach to growth.
According to EEF, the Plan for Growth must be replaced with a simpler approach. This should consist of a clear vision of the kind of better-balanced economy the government is trying to create and an economy-wide industrial strategy for delivering it.
The report by the manufacturers’ organisation points out that there will be occasions where government should seek to support individual technologies, but a modern industrial strategy should focus on measures to help the widest number of companies seeking to grow by investing and exporting.
To achieve this broad approach to growth, the government should adopt four economic ambitions: more companies bringing products and services to market, a lower cost of doing business in the UK, more globally focused companies expanding in the UK; and a more productive and flexible labour market.
Scuoler added: “This shouldn’t be a plan for picking winners; it should be about creating the right environment for any company seeking to grow through investment and exports.”
Commenting on the need for immediate growth measures, he said: “Clearly we need measures to get growth going now and priorities should include encouraging business investment, increasing access to finance, reducing energy prices and rebuilding our infrastructure. But these need to be part of an overall industrial strategy for growing and rebalancing our economy and not a series of uncoordinated initiatives.”