UK economy: Our competitiveness is in danger

I’ve been banging on for some time about the threat to British competitiveness from the high price of energy.  We now have the third highest energy prices of any developed economy, after Italy and Japan.  Meantime (how many times have I typed it, and said it?) America benefits from cheap shale gas and China exploits cheap coal.  But because this is one of the biggest problems we’re facing — and because the government doesn’t seem to have noticed it yet — I make no apology for returning to the subject.

I was shocked by an article a couple of days back from the pen of Richard Blackden.

He cites a new report by the respected Boston Consulting Group (see also http://www.businessinsider.com/bcg-rising-us-exports-2012-9).  It announces a renaissance in American manufacturing, which is (forgive me) almost exactly what I said in UKIP’s new Energy Policy booklet “Keeping the Lights on”.   Quote: “The USA is looking forward to a new industrial renaissance based on cheap, indigenous shale gas”.  I wonder if I should ask BCG for copyright fees.

At the risk of repetition, we’re driving energy-intensive industries, with their investment and jobs, out of Britain, and out of the EU.  We talk about “rebalancing our economy towards manufacturing”, but our energy policies send out the opposite message.

But BCG goes further.  It argues that the USA will become, in a few years, a global manufacturing hub.  By 2015, average manufacturing costs in the US will be 8% below UK, 15% lower than Germany and France, and 29% below Italy.  It’s not just energy.  In terms of unit labour costs, adjusted for productivity, the US is becoming more competitive.  Even against China, where wages are rapidly escalating, the US is looking more attractive, with reports of “in-sourcing” as US companies bring back production from the Far East.

How should we respond?  We must abandon high-cost energy solutions like wind (which don’t even fill their primary mission of reducing emissions), and turn instead to proven, reliable, lower-cost energy technologies like coal, gas and nuclear.

There is promising news from Europe.  There were reports through the week of a huge shale gas find in Holland.  Here in the UK we know that there is potential for shale gas.  We must get on with prospecting, extraction and exploitation.  And we must use gas as a primary fuel in its own right — not as back-up for expensive and unreliable wind.

We must also address labour costs, through productivity efforts, through training and apprenticeship programmes, but above all through deregulation and labour market flexibility.

But as always, we recall that both our over-regulation of employment, and our lunatic energy policies, are dictated by Brussels.  Until we leave the EU, we will continue to decline.

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8 Responses to UK economy: Our competitiveness is in danger

  1. Charles Wardrop says:

    Without too much exaggeration, our pro-EU politicos, who refuse a Referendum, are verging on the traitrous.
    Off to the Tower of London with them, to be fed mouldy bread and water, until they recant!

  2. ogga1 says:

    This shale gas issue, why is cameron and co so reluctant to follow it up,could it be vested interest.

    • Rather than just banging on about a subject which is, actually, common sense – Christopher Booker was talking about the lights going off almost ten years ago – it is vital that we answer this question.
      Why is shale gas so unpopular?
      I suspect that:
      1. the greenies do not like it because it doesn’t fit their Weltanschauung.
      2. there are a lot of vested interests hidden in there, including, apparently, some of Mr Cameron’s family too.
      3. there is a strongly Luddite mob out there afraid of their own shadow.
      4. the civil service are pointing out that it is against traditional government policy and you cannot change now.

      Rather than banging on, please do investigate and expose. Once all these rather disreputable truths are exposed to the light they shrivel and die.Like Dracula (wasn’t it?)

      • rfhmep says:

        It is widely believed that Gazprom is behind some of the anti-shale agenda, for obvious reasons. I have heard it said that oil majors who took a position on emissions permits fear that if we replace coal with gas, the value of their permits will drop. But a lot of it is media hysteria about seismic events and water pollution. These are genuine concerns, but manageable concerns. I fear energy shortages and power outages a great deal more than I fear fracking.

  3. Anton UK says:

    As of today that nice Mr Cameron has eluded to a voice on the EU for us plebs.
    On the minus side he hasn’t signed it in blood as requested by that even nicer Mr Farage.

  4. Paul says:

    Roger, here is a list of planned and installed wind farms in Scotland. Truly terrifying. The page is divided into the North, South, East and West:
    http://www.snh.gov.uk/docs/A763435.pdf

    • Derek says:

      Reading Christopher Booker’s column today it seems that Mr Osborne is intent on driving up our electricity. Miliband would probably be far worse. I would be delighted to see a UKIP government, but I must be realistic and admit it seems impossible.

      • rfhmep says:

        There was a time when a Labour government seemed impossible. I wish it still were. In the meantime, UKIP campaigns for a referendum, and for a rational energy policy. That’s a job worth doing — and worth voting for.

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