Speaking at King’s College London to an audience of business leaders, senior economists, government officials and politicians, the CBI director-general will say: “This recovery hasn’t been over-reliant on consumer spending and there has been some rebalancing of activity towards investment.
“We’ve seen rebalancing away from the public sector towards the private sector, away from unemployment towards employment, and we’ve also seen some rebalancing within the services sector itself.”
Cridland will add that a revision is needed to the Government’s productivity plan, to tackle the vocational education gap by reforming qualifications for 14-18 year olds, and highlight an omission – the importance to the UK’s economy of medium-sized businesses.
On the extent of economic re-balancing, Mr Cridland will say: “The UK has made progress in the last five years. A more balanced economy should not only grow faster over the medium-term, but should also produce more resilient growth.”
However, he will add: “While some commentators have been looking for a rebalance from the service sector to manufacturing, I believe this is no longer the right way to look at our economy. A transformation currently taking place within the sector is rendering the distinction between services and manufacturing less and less meaningful.
“I’m talking about two related trends. One is the outsourcing by manufacturing firms of a whole range of activities – design, programming, analytics, marketing, and so on.
“The other is the increasing tendency for manufacturers to develop and sell services themselves to gain a competitive advantage. Taking the wider impact of manufacturing into account, we estimate that the sector could account for 19% of the UK economy, double the share implied by national accounts.
“This interdependence between services and manufacturing can also be seen in the rebalancing within the services sector since 2009. Whilst the share of financial services and public administration has decreased, the share of non-financial services related to business has risen.”
