Bank “can’t see” economy needs “painful surgery?
Manufacturing entrepreneur John Elliott MBE DL believes “painful surgery” is required for the UK economy to successfully recover.
Responding to Bank of England Governor Mervyn King’s comments on Channel 4 last night, Mr Elliott, who is campaigning to highlight the need to domestically manufacture more of the goods we currently import, said key issues are being ignored.
He said: “Mervyn King last night showed why our economy is struggling and shows little hope of real improvement.
“First, he talks about the recovery starting and yet we haven’t had the surgery. If we want to get the best out of our economy we need structural change. Like curing cancer structural change needs surgery which will cause pain.
“If all we do is reduce government spending and regulate the banks we’re only dealing with the symptoms, making the patient a bit more comfortable, when we need to do the surgery.
“Quantitative easing and low interest rates are only pain suppressors rather than chemotherapy, which will deal with the root cause of the problem. The cancer in our economy is debt caused by inefficient use of our resources.
“We can remove the debt by using our resources to produce the things we need. We can do it by investing in factories and employing the unemployed to make the things we currently import. We must be prepared to give up cheap imported goods that we have to pay for by borrowing.
“This may give us some short term pain, paying more for some goods, but longer term we’ll be better off when reduced unemployment benefits more than sets off the higher prices.”
Mr Elliott, founder of the County Durham based manufacturing company the Ebac Group, also took issue with the Governor’s assessment of the UK economy’s ability to recover independently of the rest of the world.
He said: “The Governor talked about how we can’t improve our lot without the world economy improving. This shows, if more evidence was needed, that he can’t see the problem and is therefore unlikely to see the solution. If we redirected our very adequate resources to do useful work, ie making the things we need, we can remove our reliance on international debt and have enough goods and services for us all to have contented lives.”
In 2004, Mr Elliott led the successful campaign against a Regional Assembly in the North East and he was a regional chairman of Business for Sterling the pro-pound business organisation.
He is also campaigning for greater focus the trade deficit which he believes is under-acknowledged as an indicator of the health of the economy, and the ability of manufacturing to make a positive contribution to the necessary rebalancing.
A website for people to find out more about this campaign is online at www.stopgapuk.com and other manufacturers are being urged to add their voice to the debate.
People interested in getting involved with Mr Elliott can contact Ebac at 01388 605061.