#Budget2016: time to dust off the ‘march of the makers’

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With next week’s budget on the horizon, there does not seem to be much cheer in the air. The British Chambers of Commerce has cut its UK 2016 economic growth forecast from 2.5% to 2.2%, citing ‘storm clouds’ over the global economy. This snapshot of an ever increasingly difficult economic picture highlights the need to revisit the UK’s longer term goals, namely rebalancing and the ‘march of the makers’.

Yes, like a general knowledge game of the slogans that politicians forgot – the ‘big society’ must surely top the list here- the ‘march of the makers’ line from Chancellor George Osborne’s 2011 Budget speech seems to have disappeared. This may be due to the fact that even by the beginning of 2016, manufacturing output has actually been down from its level at the onset of the recession in 2008 by 6.4%. As such, this manufacturing output amount is also actually lower than when Mr Osborne coined the phrase ‘march of the makers’ in the 2011 Budget. To be fair though, the number of jobs in manufacturing has actually gone up since 2011 by about 90,000, to 2.65 million. But it is still below the pre-recession level; if ever we needed the march to start therefore, it is now.

With budget in mind, what does this actually mean? Well on high value manufacturing it means support for our UK high end manufacturers. This can be through government backing certain projects like Crossrail 2 which Lord Adonis’s National Infrastructure Commission has called a priority to receive funding and backed. Or through support, investment in skills and incentives to boost flourishing manufacturing areas, such as the renaissance in UK car manufacturing (which I wrote about earlier here)

Manufacturing focus should also move beyond physical products to encompass the digital revolution taking hold of the UK economy. According to the government’s own figures, the European Single Digital Market that is currently being shaped, could deliver a €415 billion boost of economic growth for the region. The UK is shortly to announce its new 5 year digital strategy (which may be outlined in detail in the Budget) and there must be a strong set of policy measures and incentives from government to support the UK’s rapidly growing digital industry. Here, I am unapologetically a Europhile and moving us away from this shaping process for the European Single Digital market via a potential ‘Brexit’ will only hurt the UK at the start of this potentially hugely valuable market.

A refocus on the march of the makers will also help the UK to move closer to its aspiration to rebalance its economy via a boost to exports. The UK’s trade deficit remains too high, widening in the final quarter of 2015 to £10.4bn. As such, we should be sceptical about reaching the UK government’s 2020 export target of £1trillion exports. I agree with the British Chambers of Commerce estimate that we may only achieve this in 2034 – 14 years behind schedule.

Of course not everything is in the Chancellor’s hands with the wider economic slowdown. But at least in Europe, our biggest trading partner, the markets seem positive in relation to the European Central Bank’s moves to issue more quantitative easing, as reflected by the Euro rising as much as 2% after initial falls.   Even China, which is in slowdown, saw its CRRC Corporation land its biggest ever contract in a developed nation. CRRC has won a $1.3billion deal to supply Chicago in the US with hundreds of carriages.

As the Chinese proverb says ‘a journey of a thousand miles starts with a single step’. It’s time for the Chancellor to deliver real measures and incentives that can get manufacturing going.  Will Budget 2016 finally deliver the ‘march of makers’?

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About the Author

About the Author: Crispin Oyen-Williams is the Director and Founder of Business Innovate. .

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