Monday, 6 September 2010

Under what conditions can the private sector "lead us out of recession?"

Reports of an interesting piece on Radio 4 business news on this morning’s Today programme ...

The Construction Products Association is reporting today that it expects a double dip recession by the first quarter of 2011. The sector grew in the first quarter of 2010. Why? The impact of the previous government’s stimulus package. Why the double dip prediction? The austerity measures of the ConDems as the sector is 35-40% reliant on public sector contacts.

So little prospect that this part of the private sector will lead the recovery and create the private sector jobs that will replace those lost in the public sector.

This item was immediately followed by a report on the outcome of the Engineering Employers Federation (the English version of Scottish Engineering) members survey. EEF’s chief economist reported a more positive outlook for the sector. The sector grew in the first half of the year. Why? Because of growth in key export markets as a result of the economic stimulus packages introduced by their governments, something the EEF expects UK manufacturers to continue to benefit from into next year. It’s optimism comes with a health warning though. What job growth there is seems to be in temporary and agency workers. Why? A fear that fiscal consolidation in the UK will be followed elsewhere - jeopardising the recovery.

So some prospect that this part of the private sector economy will help recovery and create jobs. Isn’t it somewhat ironic that those whose recovery strategy so relies on manufacturing exports were the architects of an industrial strategy that has so neglected manufacturing over the past three decades.

Dave Moxham - STUC

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