Since the financial crisis struck Europe, Germany’s steadfast economy has been the object of envy across the continent. Now even Britain, whose former chancellor Gordon Brown once boasted he had abolished the cycle of “boom and bust,” is admitting that it, too, wants to become more Teutonic: “We’re trying to be good Germans,” Business Secretary Vince Cable told dpa.
As observers have searched for the secrets of its success, Germany has been praised for everything from the way its football clubs nurture young talent to the parsimony of Chancellor Angela Merkel, often characterised as a Swabian housewife.
The British particularly covet Germany’s Mittelstand, the small and medium-sized businesses that produce everything from obscure machine parts to high-end cars and have been credited with providing the unfaltering backbone of its economy.
By contrast, the country that launched the Industrial Revolution in the 19th century made a “terrible strategic mistake” by embarking on a programme of deindustrialization in the 1980s, Cable said.
Britain’s manufacturing sector has shrunk from more than 30 percent of economic output in the 1970s to about 10 percent.
“The politicians of that era took their eye off the ball,” Cable said. “They were obsessed by banks and financial services and thought that Britain could earn its living through the City of London, and one of the casualties was some of our very good manufacturing sector.”
The government has now developed long-term strategies for industry, including the automotive, oil and gas, and aerospace sectors, as it attempts to wean the economy off reliance on its powerhouse service sector.
That transition means addressing things like supply chains, which are crucial to helping manufacturers optimise costs and improve efficiency and which were “hollowed-out” during the years of deindustrialization and the financial crisis, according to Cable.
However, the “overwhelming” problem faced by British manufacturers is the lack of a suitable workforce, he said. “We’re desperately short of skilled workers and skilled engineers in particular,” the business secretary said.
Britain is, therefore, trying to emulate Germany, renowned for its engineering prowess and which in the financial crisis has attracted attention for its apprenticeship system, widely credited with keeping youth unemployment down.
“We’re trying to adopt the German apprenticeship model,” Cable said, “and we’re trying to encourage young people, particularly young women, who for some reason in the UK won’t go anywhere near engineering, to do maths and physics at school so they can then do proper apprenticeship training or do an engineering degree at university.”
The government’s endeavours appear to be paying off. The manufacturers organisation EEF this week forecast that the sector would grow 2.7 percent next year, outstripping the 2.4 percent predicted for the economy overall.
And figures released last week showed a record number of Britons were taking apprenticeships. The country had almost 870,000 in 2012-13, the government said, a 77-per-cent increase on three years ago.
Critics pointed out that the recent success of the manufacturing sector is largely driven by the predominantly foreign-owned automotive industry – including the iconic Mini, long since taken over by BMW, and Bentley, which now belongs to Volkswagen – unlike Germany’s often family-owned firms.
But Cable batted aside the suggestion that foreign ownership might weaken British industry by taking profits abroad.
“We regard it as a virtue if people overseas are willing to put their savings into British industry; we think that’s a good thing,” he said, adding that “good companies” have reinvested heavily in their British businesses.
Britain is also looking to Germany for a lead on reconciling the increased emissions inevitably caused by industrialisation with commitments to reduce pollution.
“We don’t want to pursue CO2 policies that have a very damaging effect on our industries, particularly export industries,” Cable said, “but there is an acceptance that you do need to have strong decarbonization commitments. Otherwise, you don’t get the investment.”
Germany’s strategy of imposing a green levy to help the country’s move to renewable energy but allowing its energy-intensive industries an exemption worth 2.3 billion euros (3.1 billion dollars) alone last year is, therefore, worth copying, Cable said.
“I’m not sure how you’ve achieved it,” he said. “But we would like to do the same.”
Helen Livingstone, "We’re trying to be good Germans, Britain’s Cable says," Business recorder. 2013-12-06.
Keywords:
Economics
, Financial crisis
, Financial services
, Energy-intensive
, Unemployment
, Economy-UK
, Industries-UK
, Europe
, Germany
, London
, UK
, EEF
