Part of the planned recovery of the UK economy from the recession, credit crunch and over extended public sector is forecast to come from an export boom. Yesterday’s figures for March were disappointing, but they are just one month’s figures. They show a fall in exports of goods from January to February, a rise of £1 billion in the overall deficit, with exports of services still yielding a very handy £5.4 billion surplus.
Within the goods export figures, the weakeness was greater with the rest of the world than with the rest of the EU, despite the gathering economic weakness on the continent. What more should be done to improve the position?
The Prime Minister and other leading Ministers are well aware of the need to improve the UK’s export performance to the faster growing parts of the world. They realise that the EU market is going to be stagnant at best for some time to come, given the obvious stresses in the Euro and the policies of mutual deflation being pursued there. They are hopping on to planes to take senior business people off to Asian, Middle Eastern and Latin American destinations, and doing their bit as super salesmen where government can make a difference or is expected to be in support.
Meanwhile, back home, it is taking time to create the extra factory output needed when the UK does have a success on its hands. Consider the case of Jaguar/Land Rover. Last year they launched an attractive new vehicle, the Range Rover Evoque. It was clear from the pre launch expressions of interest, and from the early reviews and orders, that this was going to be a big hit. Now there are frustrated UK buyers, told to wait six months for delivery, now facing a minimum of nine months wait for their vehicle. It is taking time to crank up production to the levels needed to satisfy buoyant home and export demand. Home demand may in part be import saving, as the prospective purchasers may otherwise opt for a foreign made vehicle.
UK manufacturing is restricted in output when it has popular products. It takes time to get planning permission, to recruit and train a good workforce, to negotiate all the regulatory hurdles, if you can obtain the capital needed to establish the larger plant. Meanwhile energy intensive business is under pressure from the high energy costs that a UK and EU base entail compared to US and emerging market competititors. The government is trying to abate the high prices for the largest users of energy through subsidy, but energy cost remains an obstacle to successful competitive manufacturing in the UK. it needs instead to trigger more energy developments, and to pursue a policy of cheaper energy instead of interfering with the market in a way designed to raise prices.