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UK slowdown to impact trade with India

Sanjay Suri in London

A long-term impact on British trade with India is expected following a sharp fall in British manufacturing sector.

The decline will impact decisions in many countries on buying British. Made in Britain is not being made much in Britain any more.

The figures, released on Tuesday, show that the output of investment goods fell 5.1 per cent in the second quarter of this year compared to the first. The output of electrical goods fell as much as 12.1 per cent, and of transport goods 3.4 per cent.

Manufacturing across the board fell 2.0 per cent in the second quarter over the first. The decline compared to last year was more dramatic.

The 2 per cent decline was the sharpest for more than a decade. The first quarter had itself shown a fall of more than 0.7 per cent. Britain is now officially in recession.

The decline in British manufacturing is being reflected already in Indian imports from Britain. Import of British manufactured goods is either declining or staying more or less stagnant.

The import of metal products fell from $109 million in 1996 to $45 million last year. The import of engine parts declined from $240 million in 1996 to $172 million last year.

The import of specialised machinery halved from $160 million over the period. The import of electrical machinery fell 50 per cent over the past five years.

Apart from such heavy manufactured goods, the import of a wide range of British manufactured goods fell from about three-quarters of a billion dollars a year in 1996 to less than half of that last year.

The sharp decline in manufacturing in Britain is now expected to accelerate this decline in buying British, according to a trade official.

Britain is hitting panic buttons over the decline, which is marked even in an environment of a general economic downturn in the US and Japan. Business leaders in Britain blame the strong pound for much of this decline.

The Confederation of British Industry said following the latest survey that news of a technical recession in manufacturing was "worrying" and called on the government to acknowledge the importance of the sector to the economy.

John Cridland, deputy director-general, said: "This is worrying news that reflects the worsening global outlook with UK manufacturing following in the tracks of the US and Japan."

Cridland said that "while much of the service sector continues to do well, no one should doubt that manufacturing remains fundamental to the health of our economy. Much service sector activity is critically dependent on manufacturing, which is also crucial to our balance of trade and the prosperity of many UK regions."

He said "the Chancellor (minister for finance in Britain) must put the right building blocks in place to help manufacturers in their continuing drive to boost productivity. Tax credits for research and development will be particularly important, providing they are well implemented."

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