The Government’s policies for tackling the trade deficit need an urgent re-think in the aftermath of the BREXIT vote, according to John Elliott MBE DL., Chairman of Ebac Ltd.
Elliott believes that the UK will never have a strong economy without a solid manufacturing base, preferably British-owned.
Putting his money where his mouth is, his company has invested significant time and money in a manufacturing facility to return washing machine production to the UK.
According to the Chairman, it could have been more profitable for the business to manufacture in Eastern Europe, but, “Some things are more important than short term profits.”
Elliot wants to see two changes in government policy, both of which he believes are possible after Brexit:
- Stop being fearful of tariffs with the EU because they make manufacturing in the UK a better proposition.
- Start offering direct support to homegrown manufacturers by way of easements on costs such as rates, energy and employment. These investments by the Government will be repaid many times over as the nation will benefit from a strong, sustainable and sound economy where supply of goods and services matches consumption, which isn’t the case now.
He explained: “Tariffs are a double-edged sword and, because we import more from the EU than we export to it, the effect of tariffs will favour UK manufactures over those in the EU.
“The tariffs that are added to EU made goods will mean the UK consumer will have to pay more, but the effect on the overall economy is neutralised because the tariffs are paid to the UK exchequer. This revenue could be used, for example, to reduce VAT.
Ebac has been at the forefront of dehumidifier and water cooler manufacturing for more than 40 years and 20 years respectively. The firm is now expanding its range of products, having launched a range of air source heat pumps in 2013, and developed its facilities and team to move into home appliances in 2014.
Ebac is set to become the UK’s only manufacturer of washing machines and with the recent acquisition of the Norfrost brand, chest freezers, to grow sales in the laundry and refrigeration sectors.
“The effect of this tariff will make UK manufactured goods more attractive and should help to kick start the growth of UK manufacturing.
Elliot continued: “Successive governments have allowed manufacturing to decline or pass into the hands of foreign companies. If we added positive government action to the benefits of tariffs on EU goods, we can achieve even more growth in our once strong economy.
“For too long British governments have played lip service to bringing our external trade into balance and they’ve accepted our deficit as normal, paying for it by selling our valuable assets. Unfortunately, we can only sell them once and we lose them forever.
“The fundamental problem of our trade deficit is very simple; we consume more than we produce. This being the problem the solution is also very simple, consume less or produce more or both. Printing money, keeping interest rates low has not worked. How could it be the solution? We need structural change rather than fiddling around the edges.
He concluded: “Brexit gives us the opportunity to do things differently and if we don’t make changes, things will stay the same. We must question the status quo. First and foremost, we need an industrial strategy. The Government needs to make investing in manufacturing attractive. Leaving it to the market hasn’t worked.”