thenextwave

Britain’s car exports at 20-year high

Posted in blindspot, business, cars, economics, emerging issues, trade by thenextwavefutures on 30 January, 2008

One of the things you learn working as a journalist is that most news is predictable – a point satirised by Michael Frayn in his outstanding novel The Tin Men in the 1960s. But sometimes headlines do still surprise you. One such was the news that British car exports had reached record levels last year.

Almost 1.19m cars were shipped abroad in 2007 – the highest figure, according to the SMMT website, since 1987 (as far back as the data on the site shows). The story is slightly more mixed than the headline suggests, since overall UK production was down (a much higher proportion went overseas). At the same time, though, just over 215,000 commercial vehicles were produced – the highest figure for ten years.

When I first saw the headline, I was slightly sceptical; first instinct was that there must have been better years back in the 1970s or so. Looking at the SMMT data behind the headlines, it is striking that – compared to the early ’90s – UK car production is up about 20%, and exports are far higher. I wasn’t able to find earlier data, but it’s possible that between the ’60s and mid-80s production may have been higher, with more UK sales. It’s also possible that – given much lower levels of affluence – car sales were simply lower generally across Europe.

The reasons: according to Paul Everitt of the SMMT, are a combination of the stronger Euro against the pound, well-designed vehicles from some famous British (if no longer completely British-owned) marques – including Rolls-Royce, Bentley, Land Rover, and the Mini, and also investment by foreign owned plants. Nissan, for example, has has to divert UK exports of Nissans to Europe instead.

One of the issues this raises is about the way policy assumptions about the future shape of the economy influence the outcome. If you hitch your economy to the financial services sector, it follows that you’ll prefer  higher interest rates and a strong currency – both of which are bad for exporting industries. This then reduces investment and skills. As Everitt said:

“Looking at areas [of the economy] where there is now concern, these are the areas we have been told were the future. We were told that this future was with service industries and we did not need to worry about manufacturing. I think it’s time we looked once again at the value of manufacturing.”

Related posts: Signs of deep shift in the economy

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