The chemical industry, the UK’s largest manufacturing exporter, has urged the Chancellor of the Exchequer, Rishi Sunak, to use his forthcoming Budget to invest before the UK economy stagnates.
The Chemical Industries Association, with member companies ranging from global multinationals to SMEs, said investment is critical in three areas:
· Transport - focusing predominantly on road and rail but not forgetting the importance of improved docks and air infrastructure to regional exporting businesses.
· Reducing energy costs – the price of electricity is typically 65% higher than the European average - through any means necessary, from incentives for the use of green energy to general subsidies.
· Further education - including technical colleges that will help the UK progress T-level qualifications. Also needed is an overhaul of the failing apprenticeship levy.
Steve Elliott, the Association’s Chief Executive, said “These measures, together with a review of business rates, would give our sector and the economy an important platform on which we could build a real manufacturing base for the country, bringing benefits to all regions of the UK. We are concerned that no action or limited interventions in the areas we have identified will lead to stagnation when we need to invest in technology, infrastructure and skills to prosper in our new global trading environment.”
The Association has also addressed the productivity challenge. Productivity in the UK economy has been modest since the financial crash with growth of only 3.1% in the last 13 years. This is not only lagging far behind historic trends but also is significantly lower than international competitors. CIA research shows that regional productivity in the chemical industry is between 1.2 and 4.5 times greater than any other part of the working economy. These differences are most notable in the poorest performing regions such as Wales and the Northeast where productivity in the chemical industry is 2.8 and 3.0 times larger than the working economy.
Presenting these figures, Steve Elliott added “The chemical industry is strongly aligned with the government’s pledge to reduce regional economic inequality. Existing chemical industry investment across the UK is, frankly, already propping up a weak overall productivity performance across many regions. A supportive UK/EU trade deal and that necessary investment in technology, infrastructure and people will therefore not only strengthen a key sector of the UK economy but also provide significant social and environmental benefits for all”.
The Association’s latest quarterly survey of member companies identified:
- Only 35% of companies claimed all of their apprenticeship levy entitlement
- Over 50% of respondents felt business rates are either in need of a review or need urgent reform.
- The industry wants government to invest in transport, reducing energy costs and education.
- The EU (provided we get the right future deal), USA and China are seen as the three largest opportunities in 2020.