Building a stronger, better balanced economy Lee Hopley EEF Chief Economist 16 th July 2013
May 09, 2015
Building a stronger, better balanced economy
Lee HopleyEEF Chief Economist
16th July 2013
Overview
• Economic ambitions v reality
• The role of manufacturing in a better balanced economy
• An industrial strategy – where now for government?
A different type of growth,forecast contributions to growth
• “gradual rebalancing of the economy, with business investment and exports playing a greater role and government spending and debt-fuelled consumption a smaller role.”
George Osborne 22/6/10
• “An economy that is seriously unbalanced both in its sectoral mix and in its regions.”
Vince Cable 03/06/10
• “To achieve a rebalancing we need to sell more to, and buy less from, economies overseas”
Mervyn King 19/10/10
Source: Office for Budget Responsibility
Some signs of growth,% quarter on quarter change in GDP
Source: National Statistics
..but the better balanced kind still elusive,business investment £m, and goods trade balance £m
Source: National Statistics
Manufacturing – ambitions and characteristics right for rebalancing
• Accounts for:
• Half of UK exports
• 70% of exports to BRICs
• 36% of manufacturers export
• Over 70% of BERD
• 13% of CT receipts
• 12% of capital investment
• Aiming for:
• Increased growth from emerging markets.
• Opportunities to diversify into new supply chains.
• Commercialising new technologies.
• Higher levels of productivity.
• Collaboration on innovation priorities.
Government has a role in supporting better balanced growth
• There is a lot going on!
• Sector strategies
• Localism
• Infrastructure
• Business Bank and review of business support
• Tax reform – competitiveness and simplification
• £1tillion export target
• But something is still missing…
A strategy for growth
A vision for the economy beyond simply balancing the books with a coherent approach across
government and clear accountability
A clear vision for the economy
Consistency and accountability across government
900,000 SMEs paying for corporation tax cut with lower capital allowances
Tax avoidance debate
Unilateral carbon tax pushing energy costs above
EU counterparts
No plan to promote FLS to those who need it
Adding costs with pay audits and fines for employers
losing Tribunals
Migration policy encourages foreign students to leave
after graduation
Bad for Growth
Good for Growth
50,000 companies benefitting from lower
corporation taxes
Lowering the regulatory burden from the CRC
Commitment to keep green policies in line with the rest
of Europe
£80 billion Funding for Lending Scheme to increase flow of cheaper finance to
business
Reducing regulation with Tribunals and Redundancy
laws reform
Apprenticeships funding increased with efforts to
drive up standards
Closer cooperation across
departmentsDecision-making
structures that are fit-for-purpose
Open and transparent commitment to make
progress on its economic ambitions
Not just implementation – decisions must be
aligned with ambitions
Transparency on progress
Making it happen…
Ambition How will we know we are making progress?
More cos bringing new products and services to market
Include innovation funding in the Science budget ring fence and retain national decision-making on spending
A further 25% expansion of the TSB SMART scheme
More globally focused cos expanding in the UK
Long term capital allowances reform
Review potential action to increase competition in SMEs banking, including a switching incentive
A lower cost of doing business
Implement Loftstedt review to simplify H&S regulation
Compensate electro-intensive manufacturers
Work with EU partners on better regulation
A more productive and flexible labour force
Reinstate the Tier 1 post-study work route
Extend Industrial Partnerships across the economy
Re-directing funding for apprenticeships from providersto employers through the tax system
A foundation for rebalancing
Energy
Access to financeEducation
Infrastructure Taxation
Regulatory Burden
Planning
Higher skill levels
Tax and investment
Export support
Procurement
Higher education/ business collaboration
Tax and innovation
TSB/ catapults Sector councilsForesight projectTechnology
support Future
proofing
Supporting business entering new markets
Helping businesses invest and expand
Industry business environment priorities
Creating a sustained
strong foundation for business
More businesses
bringing new
products and
services to market
More globally-focused
companies choosing
to expand in the UK
A lower cost of doing
business
A more productive and more
flexible labour force
Rebalancing