Osborne should use Budget to help food firms invest

Osborne should help food and drink firms invest to boost the UK economy, Kapstein claimed

Food and drink manufacturers should be encouraged to invest in their businesses by new measures in chancellor George Osborne’s budget this week in a bid to boost the UK economy, according to a leading economist.

Leading economist Professor Ethan Kapstein said the sector was a “hugely valuable asset” in the government’s battle to stimulate the economy.

The largest manufacturing sector in Great Britain happens to be found in food and drink. Accordingly, it makes sense for policy makers to take a careful look at this sector and the opportunities for future growth,” said Kapstein, who is a senior research fellow at University of Oxford and UK Department for International Development.

UK food and drink manufacturing was extremely progressive in terms of technical advancements, product innovation and its response to changing demand, added Kapstein, who is also a visiting fellow at the Centre of Global Development in Washington, DC.

 ‘Encourage increased investment’

“With some emerging signs of positivity in the sector, the chancellor could use this strong platform at his disposal and look to further support the manufacturing sector through measures to encourage increased investment and to help companies manage their costs – not least the high energy prices about which many British firms are complaining.” 

He said that encouraging food and drink firms to invest in their businesses would support economic activity by generating jobs, incomes, taxes and profits.

“There are very clear benefits to having a world class manufacturing supply chain operating in Britain, and for this chain to remain strong businesses must be encouraged to continually invest,” Kapstein added.

Kapstein, who was commissioned to undertake a study into Coca-Cola Enterprises’ (CCE’s) contribution to the UK economy, said the specific benefits of the food and drink sector were “exemplified by the surprising case” of CCE in Great Britain.

“It is surprising in that few people are aware how British that company is, and how much it contributes to the industrial base. Every pound of value created by CCE supports an additional £8 elsewhere in Britain, bringing nearly £2.4bn annually to the British economy.”

“With some 4,000 people directly employed, the findings also showed that CCE supports a further 34,500 high-quality, skilled British jobs through its broader value chain, from local suppliers and producers to transport, hospitality and retail workers.”

CCE will invest £52M into its operations in the UK in 2014, reaching a total of £227M of investment since 2011, Kapstein said.

Essential for the UK economy

Meanwhile, the vast majority of British adults (91%) believed manufacturing was essential for the UK economy to grow and nearly three quarters (71%) would prefer to buy UK made goods, according to a survey earlier this month by YouGov and manufacturers’ organisation EEF.

According to the poll, 74% thought the UK used to manufacture more products 30 years ago, when output is actually 25% higher than in 1982.

“As EEF’s poll notes, three-quarters of people say they would be proud to work for a business manufacturing in Great Britain – chancellor Osborne should take heed,” Kapstein added.

EEF chief executive, Terry Scuoler, said: “Long gone are the days when some believed we could get by as a service economy and leave the rest of the world to produce goods for us. It is now essential that policymakers also recognise manufacturing as a high value, high skill sector and support it with policies which encourage its growth.”

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