Business must tackle short-termism says Balls
Shadow Chancellor Ed Balls says businesses must tackle short term attitudes to drive growth
Shadow Chancellor Ed Balls has blamed a culture of short-termism for holding back growth at a manufacturer’s conference.
Speaking at the EEF National Manufacturing Conference in Westminster today, he said Britain's budget deficit will remain "stubbornly high" without action to tackle the problem.
Balls told the delegates there needed to be a "fundamental reform" of the way business worked as he published a report by leading businessman Sir George Cox which concluded that the pressure to deliver quick results had become an entrenched feature of UK business.
Balls said it had also highlighted the short-term bias in the financial system, and the challenge that posed for companies seeking longer-term capital, particularly in manufacturing.
"The longer the current flat-lining of growth, low confidence among businesses and consumers, and the resulting stagnation in business investment continues, the greater the long-term damage to our long-run growth potential.
"It is a worrying fact that over the past two and half years, only Italy and Japan among the G20 countries have had slower growth than Britain and only Italy and Saudi Arabia have seen a sharper fall in investment whilst investment has continued rising in the majority of G20 countries.
"But over the past two and a half years, UK investment has actually fallen by £3bn – compared to the OBR's 2010 forecast of a £24bn rise. Overall, investment in the UK, as a share of national income, is the lowest in the G20.
"Private sector investment lags behind not just emerging markets like Mexico and South Africa, but below Eurozone economies Italy, Germany and France and is falling further behind," he said.
Balls admitted there had been a short-term focus of successive governments – with decisions on major issues such as energy policy or transport infrastructure shunted back from one administration to the next.
Shadow business secretary Chuka Umunna told the conference that investment was being held back, with industry gripped by an aversion to taking risks.
Asked about skills shortages, Umunna said it was "unacceptable" that so many large employers did not provide apprenticeships.
The chairman of EEF, the manufacturers' organisation, Martin Temple, will give a speech this evening at the organisation’s annual dinner in London in which he will say business will make the investment required to deliver a stronger and more balanced recovery, but only if all the main parties work harder to deliver certainty and clarity of strategy on the business environment.
In particular he will say industry needs to see absolute clarity about growth priorities and fighting from within for change that makes Europe work better for British business and all its members.
In his speech Temple will say: “All areas on public spending must be subject to the same level of scrutiny on what they deliver for stronger, better balanced growth.
“Just as there can be no free passes or sacred cows for any area of public spending or any government department, the money to fund growth must be substantial. We can’t keep looking at the same departments again and again to find the savings from their budgets."
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