Articles
The evidence from our survey of readers’ opinions this week, and from the EEF survey reported opposite, is that business and production has bounced back surprisingly well from recession. Anecdotal evidence will tell you that in other areas too that there has been a recovery: even advertising revenue is up.
But reading between the lines you get the impression of wariness about the degree and duration of recovery. The EEF has noted that capital investment has not followed other indicators upwards – perhaps no great surprise when there are still restrictions on the availability of capital. Our own survey shows a small weakening of optimism, perhaps suggesting fears of a double dip.
The spectre that lingers over this tentative optimism is, of course, the public sector deficit. Next week we get the first real indication of what the new government intends to do to bring us back into line. It’s not going to be easy, and it’s far from clear whether it’s even possible without trampling on whatever green shoots of recovery there are.
There’s a further complication in the government aim of rebalancing the economy to take it out of dependence on the snakier end of capitalism and encourage profitable firms with more solid foundations and business models than those that led the economy into recession. You wouldn’t expect us, as an engineering magazine, not to be in favour of this but you also have to recognise it’s not going to be easy.
Or cheap. Engineering courses notoriously cost a huge amount more than other less equipment-based and time-consuming subjects. Returns on investment for productivity-enhancing systems or new production capabilities will tend to be measured over the long haul, which isn’t easy when the economy could do with a quick fix as well as a long-term redirection. The idea of increasing the ability of the UK economy to add value is nice but there is a cost. Value-added often adds costs initially.
Already we’re seeing difficult choices being deliberated. Engineering will benefit from the extension of apprenticeship schemes, not least in helping to correct its unfavourable demographics. But if this is to be done at the expense of some of the “upskilling” work that will bring world-class levels of productivity to our engineering companies, then the benefit may be less.
We’ll know a bit more next week. For the moment, there’s been a bit of sunshine to lighten the mood. But we all know it’s not really over yet.