Lord (Kumar) Bhattacharyya (pictured), the chairman of the Warwick Manufacturing Group, fears that the UK could enter another era of ‘boom and bust’ brought on by rising property prices in London.
The professor described the situation as ‘The British Disease’ and warned that it could result in the pound continuing to strengthen against the euro, which would badly affect exports.
Speaking in the House of Lords recently, he said: “With property prices up nearly 9% this year, we already hear calls for higher interest rates,” which would make life harder for businesses. Ahead of any interest rate rises, he said the Government should: introduce more support for manufacturers and exporters by investing in developing skills; make progress on its ambitions for de-regulation; and deliver on its promises for lending, through an expanded British Business Bank.
Meanwhile, the House of Lords also recently heard the maiden speech of the chairman of excavator manufacturer JCB. Lord Bamford said that, while Britain was now a “freer, happier and more prosperous country”, there had been changes that would “sadden and disturb any lifelong manufacturer.
In 1975, manufacturing represented over 27% of our GDP; today, it represents just 11%. In 1975, manufacturing employed over 7 million people, more than 30% of the total workforce; today, it employs 2.5 million, less than 8%.
In 1975, manufacturing contributed to a healthy balance of payments; sadly, this has been in deficit since 1984.
“These are concerning numbers for those of us who want a strong, vibrant, stable and balanced economy. However, I believe that there is much to celebrate about UK manufacturing. Britain has many world-class manufacturers, making innovative, high-quality and high value-added products. We have companies — small, specialist and world-class businesses, as well as much larger industry leaders — making products that the world wants to buy, so manufacturing still matters to the British economy. In fact, it matters a great deal.
“Financial services account for just 12% of UK exports, while the figure for manufacturing is 46%, so manufacturing is neither dead nor dying. On the contrary, it is showing every sign of life, with clear potential in value-added industries.”