My article for this survey in May 2010 was entitled ‘Uncertainty or opportunity?’ I could almost repeat that article this year, with the success of the fiscal consolidation still to be proven, the banks still concentrating on repairing their own balance sheets, and the economic crisis in the PIGS (Portugal, Ireland, Greece and Spain) still very much to the fore.
The coalition has tried to change the emphasis away from ‘the cuts’, with its more business friendly ‘Budget for Growth’, but the lack of consumer confidence is severely restricting domestic demand. The last quarter’s GDP growth only just compensated for the 0.5 per cent fall in the December quarter and the Bank of England consistently follows other economists with regular downgrades of its forecasts for 2011 and beyond, whilst the threat of inflation has intensified over the past 12 months, along with the worry of higher interest rates as a solution.
The key message from the coalition is that the private sector will be encouraged and supported to grow to compensate for the cuts in public sector expenditure. Encouragingly, the manufacturing sector appears to have responded to the challenge over the past 12 months - but is this sustainable?
I believe that there are encouraging signs locally. The Global Manufacturing Festival was a real success and highlighted the resources available locally, particularly at the Advanced Manufacturing Park and its nuclear counterpart, the NAMRC. This has been further strengthened by the announcement that Rolls Royce will be creating 700 jobs on the site, which will also host a Technology Innovation Centre. The Government is also playing its part to encourage local growth and innovation. Our Local Enterprise Partnership has started positively and has had the boost of the availability of an Enterprise Zone in its area, whilst the first round of the Regional Growth Fund is helping finance the vital link road to Robin Hood Airport.
What is vital is that the Government continues to encourage business growth and innovation, and the recent Budget was a good start. The plethora of seemingly haphazard initiatives does, however, need to be consistent in a drive for medium term sustainable growth, rather than short term job creation, in order to give our key businesses, such as those listed in our Top 100 Companies, the confidence to invest and plan for growth.