Britain’s coalition government has been urged to stop pinning its hopes of a recovery on a combination of austerity and exports and to show some dramatic leadership.
The call came from Lloyds Bank chief economist Trevor Williams, speaking at the bank’s Sheffield Manufacturing Dinner, held as part of the Global Manufacturing Festival, taking place in the city this week.
Mr Williams told 290 leading local manufacturers, politicians and local government officials that monetary policy couldn’t solve the problems of an economy that was overly in debt and nor could exporting.
“The UK cannot recover through export-led growth, which is why a 20 per cent fall in the exchange rate hasn’t led to greater recovery,” said Mr Williams.
“Our economy exports more now than it did in 1974, but last year it had the biggest deficit it has had in 25 years and, unfortunately, that means net debt reduced economic growth last year.
“You cannot rely on export-led growth when your export markets are in the doldrums. That means the UK is dependent on internal demand. You have to have an investment led and corporate led recovery.
“There’s still time to rectify the situation we are in, but recovery will take some time because it needs some dramatic leadership.”
Mark Broxholme, managing director of South Yorkshire-based Tata Steel Speciality Steels, urged the Government to give business the confidence to invest by ensuring consistency in long term planning and introducing energy and infrastructure policies that business could believe in.
“At the moment, messing about the way we are is no way to run an economy,” warned Mr Broxholme.