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Of fiscal lows and cultural highs

31 October 2011

Sentiment has deteriorated sharply among UK manufacturers in anticipation of significant falls in activity over the next three months. So said the CBI last week when it released details of its latest Quarterly Industrial Trends survey; a stark reminder that uncertainties surrounding sovereign dept issues and the Eurozone crisis are having a marked impact on confidence throughout the UK’s manufacturing sector. Manufacturing orders and output are expected to fall over the next quarter, according to the survey, following modest rises in domestic demand and production over the past three months. Hiring and investment is in decline and firms are also predicting a run-down of their stock holdings.

The outcome of the Eurozone crisis summit that kept European leaders up through the small hours of Thursday last, did provide sufficient balm to quell market fears with its ‘three-pronged’ plan. Observers, however, felt more could have been done, particularly a doubling of the bailout fund from its proposed one trillion Euros, and the need for private banks holding Greek debt to take a 60 percent (as opposed to a 50 per cent) loss. The coming weeks and months will see this latest agreement tested and, hopefully, not to the point of destruction. It’s going to be “a marathon, not a sprint” European commission president, Jose Manuel Barroso hinted in his statement following the summit’s conclusion. But outside the Eurozone, what does all this augur for our own economy, so closely linked with those of our European neighbours?

While the CBI’s survey is as definitive as we might expect it to be, given that organisation’s broad connection with industry, there are, nonetheless, ‘islands’ of UK manufacturing that continue to buck trends and whose achievements go almost unnoticed. Mark Ingham of Sensor Technology cites his own company’s experience this year, saying spring was good, summer was great, September saw a slowdown and October a pick up – all contrasting somewhat with the official figures. “When a sector is made up of a large number of small companies, each one’s individual progress can be very different, so calculating a meaningful average is very difficult,” says Mr Ingham, who expresses growing confidence that our technical industries are “coming along."

I couldn’t agree more with Mr Ingham’s view. There are numerous examples of young, small to medium sized companies (and big established ones too) that have become leading technology specialists in their chosen fields, and who are developing products that will help solve problems associated with energy supply and the environment. And some of these companies are real success stories, both in terms of their balance sheets and their technical breakthroughs. It’s a shame much of this goes unsung, as we are evidently in some need of cheering up!

China in the UK
While we in Europe bemoan our economic woes, China continues to put in annual growth figures of around 9 per cent. Indeed, there has been some courting of the Chinese in recent months, particularly by the bailout fund - er, sorry, the European Financial Stability Facility (EFSF), which is urgently seeking international support for Europe’s ailing economies. No less a figure than EFSF head, Klaus Regling flew off to Beijing at the end of last week to negotiate the purchase of further EFSF bonds. I think we can assume that human rights were no where to be seen on Mr Regling's agenda.

The UK is no less averse to welcoming Chinese inward investment; however, the present entente is more cultural than fiscal. On Saturday we saw the culmination of ‘China in the UK Week’, a celebration of the two countries’ educational ties.

Chinese delegates introduced study opportunities in China directly to UK students at a ‘Study in China’ exhibition, held for the first time in the UK last Friday. Universities such as Renmin University of China, Harbin Institute of Technology and Beijing Normal University took part in the events and leaders from the UK and Chinese higher education sector met with executives from multinational corporations with a view to strengthening educational partnerships and academic exchanges between both countries.

The current scale and future potential of China-UK educational collaboration and academic exchange is not insignificant. There are now over 130 approved joint academic programmes between the UK and China, over 90,000 Chinese students studying in the UK and that the number of international students in China, which currently stands at 265,000, including 3,300 British students, is expected to more than double by 2020.

And there was another ‘summit’ last week, albeit not so well publicised as the Brussels affair. At this one, senior representatives from China and the UK’s education sectors discussed a new three-year action plan to forge stronger links in higher education, vocational education and skills training, schools and language teaching.

Science minister, David Willetts hoped the action plan would see a range of sustainable partnerships forged between the two nations’ universities, involving a number of new programmes aimed at increasing the mobility of students, teachers and practitioners between the UK and China. Ideas mooted at the summit included a work placement pilot and an enhanced ‘Study in China’ programme commencing in 2012.

Les Hunt

I received this comment on last week's leader from Mr Kristen J Cadman:

I hate to say anything to justify a statement by a politician! However,
insulation is a very useful 'temporary plaster' because we waste about
40% of our energy on space heating. When the snow comes I can see >90%
of my neighbours have less attic insulation than the houses built to new
building regulations. We do not need £billions spent on smart meters to
know that this gives us a cost effective cut in heating use. New
technology can be an added bonus when it has been fully developed during
the breathing space.


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