UK: UK GOES TOP OF THE CLASS.

UK: UK GOES TOP OF THE CLASS. - KPMG's manufacturing performance index reveals that, despite a dip in mid-1993, UK is now best in class in Europe relative to its three main competitors in manufacturing industry. The UK recovered from 86 in January 1993 t

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Last Updated: 31 Aug 2010

KPMG's manufacturing performance index reveals that, despite a dip in mid-1993, UK is now best in class in Europe relative to its three main competitors in manufacturing industry. The UK recovered from 86 in January 1993 to 92 by mid-year.

- The German index fell from a high of 114 in April 1991 to just over 90 in 1993. This corresponds to Germany's continued recession which is threatening other European economies, including the as yet fragile recovery in the UK. The German car industry is to lose 80,000 jobs, with pay cuts and four-day weeks for the remaining workers. Unemployment is climbing rapidly and industrial production is falling, by German standards, at an alarming rate.

- There is bitterness in the East where the promised economic miracle has not materialised. Frankfurt economists remain gloomy about the immediate outlook. There is danger too that as the economy falters, Germany will become more insular and protectionist, with serious implications for the rest of Europe.

- The performance of the French economy, which is closely allied to Germany's, has slid and there's still no sign that the worst is over.

- Producer price inflation in the UK rose for five consecutive months in mid-1993. This is not surprising given a 12% devaluation of sterling, and the subsequent effect on import prices would have been higher but for the recession in other parts of Europe. Recession in Europe increasingly outweighs the boost to competitiveness from sterling's devaluation.

- Headline inflation in the UK continues to be the lowest of the four countries, having fallen from a peak in October 1990 of 11% to between 1-2% in 1993. Too much should not be read into this as the UK figure includes mortgage interest payments.

- UK recovery is patchy and uneven. Recent surveys suggest output growth is strongest in Wales, the West Midlands, and East Anglia and weakest in Yorkshire, Humberside and Northern Ireland. Recovery remains linked to German fortunes. While Germany suffers, so will the rest of Europe.

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