Presenter – Lee Hopley, Chief Economist, from EEF The manufacturers' organisation will be presenting on “Building a Stronger, Better Balanced Economy for SME high tech companies" derived from its strategy The Route to Growth. Lee leads EEF’s work on the economy and industrial policy. This encompasses both macro-economic issues and matters relating to productivity and competitiveness. She represents EEF on UKTI’s Advanced Engineering Advisory Board and is a member of the Economic Monitoring Panel at the Department for Business, Innovation and Skills.

1. Building a stronger, better balanced
economy
Lee Hopley
EEF Chief Economist
16th
July 2013

2. Overview
• Economic ambitions v reality
• The role of manufacturing in a better balanced economy
• An industrial strategy – where now for government?

3. A different type of growth,
forecast contributions to growth
• “gradual rebalancing of the
economy, with business investment
and exports playing a greater role
and government spending and
debt-fuelled consumption a smaller
role.”
George Osborne 22/6/10
• “An economy that is seriously
unbalanced both in its sectoral mix
and in its regions.”
Vince Cable 03/06/10
• “To achieve a rebalancing we need
to sell more to, and buy less from,
economies overseas”
Mervyn King 19/10/10
Source: Office for Budget Responsibility

4. Some signs of growth,
% quarter on quarter change in GDP
Source: National Statistics

5. ..but the better balanced kind still elusive,
business investment £m, and goods trade balance £m
Source: National Statistics

6. Manufacturing – ambitions and
characteristics right for rebalancing
• Accounts for:
• Half of UK exports
• 70% of exports to BRICs
• 36% of manufacturers export
• Over 70% of BERD
• 13% of CT receipts
• 12% of capital investment
• Aiming for:
• Increased growth from
emerging markets.
• Opportunities to diversify into
new supply chains.
• Commercialising new
technologies.
• Higher levels of productivity.
• Collaboration on innovation
priorities.

7. Government has a role in supporting better
balanced growth
• There is a lot going on!
• Sector strategies
• Localism
• Infrastructure
• Business Bank and review of business support
• Tax reform – competitiveness and simplification
• £1tillion export target
• But something is still missing…

8. A strategy for growth
A vision for the economy beyond simply balancing
the books with a coherent approach across
government and clear accountability

9. A clear vision for the economy

10. Consistency and accountability across
government
900,000 SMEs paying for
corporation tax cut with
lower capital allowances
Tax avoidance debate
Unilateral carbon tax
pushing energy costs above
EU counterparts
No plan to promote FLS to
those who need it
Adding costs with pay audits
and fines for employers
losing Tribunals
Migration policy encourages
foreign students to leave
after graduation
Bad for Growth
Good for Growth
50,000 companies
benefitting from lower
corporation taxes
Lowering the regulatory
burden from the CRC
Commitment to keep green
policies in line with the rest
of Europe
£80 billion Funding for
Lending Scheme to increase
flow of cheaper finance to
business
Reducing regulation with
Tribunals and Redundancy
laws reform
Apprenticeships funding
increased with efforts to
drive up standards
Closer cooperation
across
departments
Decision-making
structures that are
fit-for-purpose
Open and transparent
commitment to make
progress on its economic
ambitions
Not just
implementation –
decisions must be
aligned with
ambitions
Transparency on
progress

11. Making it happen…
Ambition How will we know we are making progress?
More cos bringing
new products and
services to market
Include innovation funding in the Science budget ring
fence and retain national decision-making on spending
A further 25% expansion of the TSB SMART scheme
More globally
focused cos
expanding in the UK
Long term capital allowances reform
Review potential action to increase competition in SMEs
banking, including a switching incentive
A lower cost of
doing business
Implement Loftstedt review to simplify H&S regulation
Compensate electro-intensive manufacturers
Work with EU partners on better regulation
A more productive
and flexible labour
force
Reinstate the Tier 1 post-study work route
Extend Industrial Partnerships across the economy
Re-directing funding for apprenticeships from providers
to employers through the tax system

12. A foundation for rebalancing
Energy
Access to
finance
Education
Infrastructure Taxation
Regulatory
Burden
Planning
Higher skill
levels
Tax and
investment
Export support
Procurement
Higher education/ business
collaboration
Tax and
innovation
TSB/ catapults Sector councilsForesight project
Technology
support
Future
proofing
Supporting business
entering new markets
Helping businesses invest
and expand
Industry business
environment priorities
Creating a
sustained
strong
foundation
for business
More
businesses
bringing
new
products
and
services to
market
More
globally-
focused
companies
choosing
to expand
in the UK
A lower
cost of
doing
business
A more
productive
and more
flexible
labour
force
Rebalancing