Is the Government Finally Waking Up to Britain's Huge Trade Problem?

20/01/2016 11:55

The Tories have an appalling record when it comes to meeting their own targets and delivering on what they promise. For that reason, I was interested to read yesterday that one Government minister is finally waking up (and owning up) to the UK's huge trade problem.

While Mark Carney spoke yesterday at Queen Mary University about slowing UK economic growth, Lord Maude, the Government's Trade Minister, presented to the Cabinet about the UK's trade situation. They should have had lots to talk about.

Despite much fanfare on its announcement in 2012, George Osborne's target to double UK exports to £1trillion by 2020 looks set to be woefully missed. In fact, the Office of Budget Responsibility is currently predicting that we will fall short by a whopping £350billion.

Maude himself admitted that it would be a 'big stretch' for the Government to meet the target. In order to do so we would need our export market share to rise by 50% over this Parliament - instead, it's set to fall by 3.3%. If the rate of progress forecast across this Parliament continues it will be 2032 by the time the target is finally reached.

But these dismal figures aren't new to everyone in Government, who have been trying to gloss over the situation for some time. Indeed buried deep in the OBR's analysis of the Autumn Statement and Spending Review was the revelation that the current account deficit is the largest in peacetime since at least 1830. Cameron's Government has managed to run up the biggest current account deficit since the Duke of Wellington was the Prime Minister.

Boosting our exports has to be key to tackling the historic deficit, yet the outlook for exports under this Government has been consistently disappointing and nowhere near enough has been done to remedy the situation.

While the UK has a surplus on trade in services, that is more than offset by a very large deficit on trade in goods. Domestic export industries such as steel and manufacturing, which is now officially back in recession and has a lower output now that in 2008, have come under huge pressure in recent years from soaring energy costs and cut price competition from markets such as China. The announcement yesterday that Tata steel is to fire 1,050 workers from Port Talbot due largely to the dumping of Chinese steel on the UK market, and the Government's total inaction, is symptomatic of the problem.

In addition to doing little to tackle the problem George Osborne is failing to do enough to protect Britain from the economic headwinds from China. It was announced today that China's economic growth had slowest to its lowest level in 25 years, which follows weeks of financial turmoil in which trading on the country's stock market was suspended twice by the Chinese Government. Just a few months ago the Bank of England warned that if Chinese GDP were to fall by 3% relative to its trend then the output in the UK would be around 0.3% lower as a result.

This issue is too important simply to be another missed target and broken promise from this Tory Government. Steps urgently need to be taken to address the weaknesses in our economy, but there is no sign that these will be forthcoming from the Tories. The Government may have just had its first Cabinet meeting on the subject but meetings no longer make the cut - it's time for action.

Jon Ashworth is the Labour MP for Leicester South, and Shadow Minister without Portfolio