Chancellor uses West Midlands speech to warn of hard economic truths

CHANCELLOR George Osborne is visiting a West Midlands automotive sector manufacturer  this morning and will give a speech from there warning that the UK economy still has a long way to go.

He will say that more “painful cuts” are needed to put the economy on a sustainable footing.

However, his attempts to dampen down hype surrounding growth in the UK economy come against the backdrop of a survey issued this morning by EEF, the manufacturers’ organisation and challenger bank Aldermore, which suggests UK manufacturers are set to top the EU growth league in 2014 with export success a key contributory factor.

In a keynote speech on the economy, Osborne will say: “We’ve got to make more cuts. That’s why 2014 is the year of hard truths – the year when Britain faces a choice.

“Do we say ‘the worst is over, back we go to our bad habits of borrowing and spending and living beyond our means and let the next generation pay the bill’?

“Or do we say to ourselves ‘yes, because of our plan, things are getting better – but there is still a long way to go and there are big, underlying problems we have to fix in our economy’?”

The EEF/Aldermore Executive Survey, meanwhile, reveals that steady growth gains are expected but greater economic uncertainty is the new norm.

Projected manufacturing expansion of 2.7% puts UK top of EU growth league and is the second best figure since 1994.

It says the drive into new export markets will continue and a more stable eurozone will help too.

Britain’s manufacturers are expecting an improved outlook in 2014 which should lead to growth in exports to emerging markets and a turnaround in investment, according to the survey of 200 senior executives.

Richard Halstead, Midlands Region director of EEF, said: “Manufacturers are telling us they expect to make a greater contribution to growth, investment and jobs this year. 

“Innovation, energy and diversifying into new supply chain remain key opportunities but the UK and the eurozone are also looking better. However, global uncertainty and rising energy costs pose significant risks and, the challenge for industry and government this year will be to get industry’s investment plans over the line.”