In news to gladden the heartlands of the UK as well as the halls of the treasury, the CBI’s latest industrial trends survey suggests that the confidence amongst UK manufacturers in 2014 is at its highest since 1973.
Forty-one years ago, before the oil crisis, 3 day week, Thatcher administration, Falklands, the greedy ‘80s, new labour, 9/11, Iraq, Afghanistan and the rise of the current Bullingdon Club administration.
CBI chief policy director, Katja Hall, welcoming the news said:
“Our industrial base is seizing a bigger role in the UK’s economic recovery, with output, orders and hiring all on the up.”
“There are still bumps in the road ahead, with only a tepid recovery likely in the eurozone, the pound creeping higher and a rapidly evolving situation in Ukraine.”
One of the messages consistently coming out of previous surveys has been the need to “balance” the recovery across all sectors and whilst the buoyancy of manufacturing is not in doubt, concerns remain about the ability for the wider economy to mirror the recovery.
It is equally heart-warming therefore to see that the CBI reports that the confidence of UK retailers in long term growth is increasing, with 42% of businesses surveyed saying that their sales performance was up on the same period in 2013, not only this but sales were reported by the CBI to have increased for five consecutive months.
Chair of the CBI survey panel Barry Williams said:
“The high street has a spring in its step – retailers performed well in April and enjoyed a strong rise in sales compared with this time last year. It’s a welcome rebound from March, largely down to the later timing of Mother’s day and Easter.”
…As EU Meddles…
Despite this positive sentiment there have been storm clouds rising from the usual source – the EU.
The spectre of state aid and its questionable application by the EU, is once again expected to negatively impact the UK. This time it is those energy-intensive industries from the buoyant manufacturing sector that will be hit.
The issue has arisen by virtue of the EU’s decision to prevent compensation being paid to the glass, ceramic, gypsum, lime and cement industries for the cost of the carbon floor price.
As usual with EU issues it is the technical small print that hurts.
The carbon floor price is a UK tool for taxing the use of fossil fuels by levies on generators. The intention was to act as a boost to the EU’s Emissions Trading Scheme. But the EU says that because of this ‘link’ only those industries eligible for compensation under the ETS can receive their share of the carbon floor price compensation.
The Mineral Products Association‘s Director of Economics and Public Affairs Jerry McLaughlin warned:
“This will significantly undermine competitiveness globally and specifically in Europe for the industries concerned, as no industries in Europe or elsewhere have to pay the equivalent of the UK carbon price floor”
As the economy attempts to recover and the energy market endeavours to renew itself both figuratively and literally it is to be opined that the reasoned aims of the government and business to strive for a balanced recovery and energy market are met with fresh EU obstacles. At a time when manufacturing is recovering from the economic collapse and getting to grips with far-eastern competition, and whilst consumer sentiment is still fragile, the last thing needed is an energy shaped hole in the recovery. But that’s what the EU has once again delivered for the UK, friends indeed.