UK: UK HAS THE COMPETITIVE EDGE.

UK: UK HAS THE COMPETITIVE EDGE. - Effective use of existing capacity combined with higher levels of labour productivity and a favourable exchange rate make UK goods highly competitive in European markets.

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Last Updated: 31 Aug 2010

Effective use of existing capacity combined with higher levels of labour productivity and a favourable exchange rate make UK goods highly competitive in European markets.

- Recovery in UK manufacturing industry has slowed since mid-1993. Strong growth has been experienced in the manufacture of investment goods since the beginning of last year, but this has been offset by sluggish growth in consumer and intermediate goods production.

- The German economy appears to have 'bottomed out' after a slight recovery in manufacturing performance in the third quarter of 1993.

- Manufacture of investment goods in Germany, France and Italy has continued to tail off, reflecting the low level of confidence in these economies. This is particularly striking in comparison with the UK, where demand for investment goods is encouraging.

- Inflation in the UK fell to its lowest level for 26 years at the end of 1993, allowing the opportunity for cuts in base interest rates.

- France, too, continues to have low levels of inflation and a balance of payments comfortably in surplus. Yet France is suffering from a prolonged and deep recession, not helped in the short term by a strong commitment to monetary union with Germany.

- Nissan became the top car exporter in the UK in 1993, exporting about 196,000 cars from its factory in Sunderland, Tyne and Wear. In second place came Rover, some 30,000 vehicles behind. Ford, traditionally the UK's leading car exporter, suffered a disastrous 1993, caused largely by the recession in its key Continental markets. Similarly, Vauxhall was hit by the downturn in Europe, which, excluding the UK, was down by 18% from the previous year.

- Productivity levels in the UK continued to improve in 1993 while productivity in Germany, France and Italy remained relatively static. Increased production levels in the UK in 1993, combined with continued reductions in the numbers employed in manufacturing industry have contributed to the rise in UK productivity. This has now improved by almost 50% since 1985 compared with relative increases in Germany of 10%, France 18% and Italy 45% over the same period.

- Utilisation of available capacity in manufacturing industry in the UK improved from 76% to 82% during 1993, while in Germany this fell from 81% to 78%. The rise in the UK's manufacturing output was achieved largely as a result of using existing capacity more effectively. This, combined with higher levels of labour productivity and a favourable exchange rate, should mean that UK goods are highly competitive in European markets. The UK should be well placed to take advantage of any upturn in Europe in 1994.

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