Britain’s factories are set to become less competitive on a global scale over the next five years, a new report suggests.
The UK is ranked only 17th out of the 26 countries in the Global Manufacturing Competiveness index compiled by Deloitte, the business advisory group and the US Council on Competitiveness, and is expected to fall to 20th place by 2015.
This will come as a blow to hopes for a “rebalancing” of the UK economy, replacing its dependence on consumer spending with a stronger manufacturing base. Manufacturing accounts for about 14 per cent of the UK’s economic output.
David Raistrick, the UK manufacturing leader for Deloitte, said: “It is vital that the new UK government works jointly with manufacturers to ensure they can improve their global competitiveness ... Given the significant proportion of UK GDP earned through our manufacturing base, and the number of people employed in this sector, any further slippage in our global competitiveness will have a real impact on the broader UK economy.”
China and India are ranked first and second in the index, which includes 18 of the G20 economies and eight other major manufacturing nations, and are expected to remain in these positions over the next five years.
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The index was compiled by surveying 400 senior manufacturing executives, who took into account factors including talent, cost of labour, energy costs, government policies, tax systems and infrastructure.
The US was ranked in fourth place, and Germany was in eighth place.
“The fact that both the US and Germany are ranked in the top ten shows that the drivers of competitiveness are not just cost-based. Both the US and Germany have high wage costs and rigorous safety and environmental standards in place, similar to the UK, but the US is given a score of 5.84, more than double the UK’s score of 2.82,” Mr Raistrick said.
The report said that European executives felt hampered by labour laws and regulations, as well as energy policies and environmental policies.
Competitiveness
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(10=High 1=Low)
Current
1 China 10.00; 2 India 8.15; 3 South Korea 6.79; 4 US 5.84; 5 Brazil 5.41; 6 Japan 5.11; 7 Mexico 4.84; 8 Germany 4.80; 9 Singapore 4.69; 10 Poland 4.49; 11 Czech Republic 4.38; 12 Thailand 4.17; 13 Canada 4.11; 14 Switzerland 3.07; 15 Australia 3.07; 16 Netherlands 2.90 ; 17 Britain 2.82; 18 Ireland 2.78; 19 Spain 2.67; 20 Russia 2.58; 21 Italy 2.42; 22 South Africa 2.28; 23 France 1.70; 24 Belgium 1.18; 25 Argentina 1.03; 26 Saudi Arabia 1.00.
In five years
1 China 10.00; 2 India 9.01; 3 South Korea 6.53; 4 Brazil 6.32; 5 US 5.38; 6 Mexico 4.84; 7 Japan 4.74; 8 Germany 4.53; 9 Poland 4.52; 10 Thailand 4.35; 11 Singapore 4.30; 12 Czech Republic 3.95; 13 Canada 3.71; 14 Russia 3.47; 15 Australia 3.40; 16 Spain 2.63; 17 Netherlands 2.63; 18 Switzerland 2.62; 19 South Africa 2.52; 20 Britain 2.51; 21 Ireland 2.43; 22 Italy 2.37; 23 France 1.92; 24 Argentina 1.53; 25 Saudi Arabia 1.32; 26 Belgium 1.00
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Source: Deloitte and US Council on Competitiveness