A Britain “carried aloft by the march of the makers”. That was the country George Osborne envisaged in the peroration to his 2011 budget speech. The message from the chancellor was clear; gone were the days when the economy relied on debt-fuelled spending. The clock was being turned back to the days when Britain actually made stuff.
Five years on, the latest industrial production figures suggest that the makers have yet to put their boots on, let alone start marching. Manufacturing output is no higher than it was in 2011 and is more than 6% down on the peak it reached on the eve of the deep recession of 2008-09.
There was a small uptick in factory output in 2013 and 2014 but that has now gone into reverse. Three successive quarters of falling production mean that manufacturing is already officially back in recession.
It could be argued that overall industrial production – which includes the energy and mining sectors as well as manufacturing – has been affected by the unusually warm weather in late 2015. But that explanation does not apply to manufacturing, where output fell by 0.4% in November for the second successive month.
Certainly, bodies that represent manufacturers are concerned about the recent trend. The EEF pointed to the build up of global risks, amplified in the UK’s case by a strengthening of the pound that makes exports less competitive on world markets. The British Chambers of Commerce pointed to structural issues, such as the lack of finance, as holding manufacturing back.
Forward-looking surveys speak of more gloomy news to come for industry. Unless there was a marked improvement in December, industrial production will have been a drag on the economy in the fourth quarter, with growth reliant on the service sector. There is no rebalancing of the economy. As for the march of the makers, that remains a figment of the chancellor’s imagination.
