Thursday, June 01, 2006

Whither manufacturing?

A Scania fire truck - what's wrong with Dennis?The Financial Times is telling us that British manufacturers are struggling to maintain their share in Europe's recovering economy. Its source is the manufacturing purchasing managers' index for May, which shows that, while UK manufacturers reported strong output and new order books, the improvement in business conditions has been eclipsed by stronger gains seen in all the big economies across the Channel.

UK manufacturers, says the FT, now lag behind all their continental counterparts both in the level of output recorded in the surveys and in the improvement over the past year, with Michael Saunders of Citigroup said there was cause for concern that the UK manufacturing sector was under-performing in the global recovery because the service sector, though strong, was no offsetting the relative manufacturing weakness.

Want an ambulance in London? Mercedes will do nicely"The UK has exceeded the eurozone's economic growth rate for the past 10 years, but the gap has vanished in recent quarters - we're moving from a world in which we did much better than continental Europe into one in which we’re doing about as badly", says Saunders.

As to the longer-term outlook, the FT observes that many economists see a global economy, growing at its fastest rate for 30 years, and question why the UK economy, heavily dependent on global conditions, is not doing even better.

A Peugeot does nicely for Cambridgeshire policeOf course, the reasons cannot be in any way related to the enthusiasm of public authorities – as shown by our picture gallery - to buy their equipment from European manufacturers - not that we would wish them to buy poor value equipment but one does wonder why it is that we seem to be so keen to buy from the continent and the sentiment is so rarely reciprocated.


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