Closely-watched industry figures show UK manufacturing hit by a ‘perfect storm’ of Euro crisis, weak investment. NIB would support infrastructure and new house building, say unions
Unions say the creation of a British National Investment Bank should be a priority, following figures which show UK manufacturing has been hit by a ‘perfect storm’ of the Euro crisis, weak investor confidence and poor weather.
Supporters say an investment bank would help re-build economic confidence and kick-start infrastructure and house-building.
The closely-watched Markit/CIPS purchasing managers’ index shows output and new orders both contracted sharply during July, with the steepest decline in production for 40 months.
Investment in machinery fell, as did components manufacture.
New export business declined for the fourth month running and at the fastest pace since February 2009, Markit said.
The continuing weakness of the eurozone is described as the principal drag on new export orders, although there were also some reports of a decline in new business received from Asia.
Unions say an investment bank would ‘short circuit’ the need to use the existing banks that continue to fail businesses and entrepreneurs seeking credit to underpin their development plans and employ more workers.
Unite’s general secretary, Len McCluskey said: “The latest figures, revealing that July saw the worst manufacturing performance in more than three years, show that the coalition’s cuts and austerity are not working.
“Today’s disastrous manufacturing figures show that a lack of demand is at the heart of the crisis facing the UK.
“We need a National Investment Bank that supports small businesses and focuses investment on infrastructure projects, such as a massive house construction programme and supporting a joined-up manufacturing strategy.”
A study published last month by the Labour Party into the creation of an investment bank said ‘a growing SME [small and medium-sized enterprise] sector is one of the prerequisites for future growth in the UK economy.’
Nick Tott’s report said SMEs contributed 34% of new jobs created in the economy, but that the refusal of commercial banks to invest may be stunting any growth potential in the UK.
Today’s manufacturing figures come as the Coalition government’s new scheme to prompt banks and other lenders to make more money available has come into operation.
Ministers say it will help inject £80bn into the economy.
However, critics fear the extra funding will only go to those companies with strong order books or first-time house buyers with deposits worth close to 40% of the value of their mortgage.
Said Len McCluskey: “The problem with the Funding for Lending initiative announced today is that previous attempts to encourage banks to funnel cash to businesses have not been successful.
“The government is pushing the country into a spiral of decline and it should reverse its grim austerity programme and pump demand into the pockets of the people.”
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