We've been calling for a rebalancing of the economy since the publication of our report 'Manufacturing: Our Future' almost 12 months ago and now it has the official backing of the Prime Minister who gave a welcome commitment to chart a different direction today. he echoed many of our sentiments that business as usual and a return to the same will not be enough to rebuild our economy and a new approach is needed. Business will now look to the forthcoming emergency budget as the first litmus test of this commitment

Our Chief Executive, Terry Scuoler, attended the event and echoed the  Prime  Minister's sentiments:

"The Uk's economy is now at a crossroads and we have to realise we didn't get here by accident. Manufacturers will be heartened to hear such a strong commitment from the Prime Minister that the government is planning to chart a different direction from now on. The next step is to put in place a policy framework across government at national and regional level that will build this momentum and deliver the crucial rebalancing we need.

"Reducing the deficit is clearly paramount. But, in addressing this we have to place equal emphasis on growing our way out of the current situation. In particular, government departments must balance the efforts to cut costs with a focus on pulling together to promote growth."

At EEF we are looking forward to working closely with government to promote a dynamic manufacturing sector at the heart of a rebalanced economy. There is no time to lose.

The severity of conditions affecting manufacturing was highlighted by our latest pay figures showing an unprecedented fall in the average settlement level for the three months to the end of January. The month of January is crucial as it is when most annual settlements are concluded and for an index which never moves more than point one or two tenths of a percent up or down to fall by almost a full percentage point in one month alone is unheard of.

The fact that deferrals and freezes have also risen sharply however indicates that companies are exploring every avenue in order to avoid lay offs and lose skilled workers. With companies trying every option to keep their people this is sure to add further pressure on government to help by introducing aid for short time working. If this month's figure were not bad enough, the indications from the January figure alone are that there are further falls to come, backing Mervyn King's view of how low are we going to go?

UPDATE:

Detailed data are now available in EEF's February Pay Bulletin...but if you're not a member, the FT provides a headline summary.

The issue of economic nationalism is vying with the weather for the front pages and has temporarily replaced the daily bad news of doom and gloom. Given a third of EEF membership is foreign owned, and two-third's of our output is exported, we have a vested interest in an open international economy. But as Robert Peston explains, the current debate goes beyond a single dispute at a Lincolnshire oil refinery and raises fundamental questions about the future of the UK economy.

We enjoyed the fruits of selling the family silver during the good times (Peston describes our approach to foreign ownership as 'Wimbledonisation'); are we now paying the price in much tougher times? The UK now faces a decision in terms of rebalancing its economy and investing in a world class education system to reap the rewards of its science and engineering excellence. 

As  Peston says,

"...even if the British shouldn't weep about not winning at Wimbledon and should celebrate that it's the best tournament in the world, we should aspire to be a nation of players, managers and umpires - not a nation of ball boys."