'Rebalancing' takes a back seat to George Osborne's cutting


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Rolls-Royce is far from the only British manufacturing outfit to be mired in a slough of despond. The entire sector is struggling compared with the dominant services sector.

The latest evidence of that will be unveiled by the British Chambers of Commerce.

On the eve of the Chancellor’s emergency Budget it will show that while most key service sector balances recorded small increases in the second quarter of 2015, nearly all the key ones in the manufacturing sector recorded declines.

The latter’s recovery has been painfully slow, and by contrast to those services, it has still not regained the ground lost during the 2007-08 financial crisis.

Britain’s recovery from that trough has been a two-tier one, to a degree that ought to concern us.

As I have written in the past, the efforts, such as they were, made towards “rebalancing” by the previous Government have proven ineffective at best.

The sector may hope to get a bone or two thrown in its direction on Wednesday, but even if it does it is unlikely to be enough.

Among the things on the BCC’s shopping list is investment to improve Britain’s creaking infrastructure.

Unfortunately, because the Chancellor’s deficit reduction ambitions override everything, any faint hopes on that score are likely to be dashed.

Not all borrowing is bad, particularly when it is done for the purposes of investment. Unfortunately, that message falls on deaf ears. The Chancellor seems intent on manufacturing an economy that will continue on its two-tier path throughout the current Parliament. Just as it did during the last one.