Recognising public sector contribution to growth

Recent months have highlighted the weaknesses in the economy as far as a return to growth is concerned. The hands-off approach of the current government to the market and the public spending strategy has led to the flat-lining of manufacturing and a weakening of business confidence.

Worryingly, we are now seeing manufacturing in contraction for the first time in two years and output of industrial production remaining flat. There is no doubt that global and European factors are also contributing to these figures – but that should come as no surprise and could have been mitigated with a different approach to economic policy.

The anomalies that exist in the economy as far as business is concerned are characterised by the increases in unemployment amongst young people and the cries from businesses that they cannot recruit people with the right skills.

The continuing reports from SMEs that access to funding at the right price remains difficult is countered by banks arguing that demand does not exist and that they are lending in accordance with the targets set by government.

This mismatch of economic statistics and the reality of business growth requires a fundamental rethink on economic policy and a government prepared to adopt proactive strategic policies that provide the economic environment which will persuade business to grow.

There is no disagreement amongst the business community that investment is the key to manufacturing success and Unite recognises this. However, at a time of worldwide recession, governments have to play the substitute's role where the private sector fails to deliver.

If business is to secure the economic growth for the country then government must recognise the economic sense of maximising UK businesses' opportunities to secure public procurement contracts; we must also see the creation of a national strategic investment bank to provide the funds which the private banking sector has failed to do; and we must offer more protection to UK businesses and their workers from predators who seek to make quick returns through hostile takeovers.

But the economy will only achieve the growth that is needed if we recognise that the public and private sectors both contribute to that growth. Cuts in the public sector will damage growth opportunities and dull the capacity of UK businesses and individuals to contribute to that growth. It is not a case of private versus public but rather both sectors contributing together.

Roger Jeary, director of research

Throughout recess, ePolitix.com will be focusing on a different policy theme each week. This week we are featuring articles with a focus on business and the economy.