When Chancellor of the Exchequer George Osbourne last week revealed his final Budget before May’s UK general election, he claimed Britain was ‘walking tall again’ after five years of austerity.

There were also suggestions that the UK economy will expand by 2.5% this year, rather than the 2.4% figure previously anticipated.

But what does industry in the country make of the latest Budget, and its impact upon future growth?

‘One hand tied behind our backs’

UK Steel Director and Head of Climate & Environment Policy at manufacturers’ organisation the EEF, Gareth Stace, pointed to the announcement of the early introduction of compensation from energy costs for energy intensive sectors as a welcome statement of intent – but expressed disappointment that this incentive ‘did not go further’.

He explained, “This deal will still leave energy intensive industries paying 80% of the costs of the renewables support until April 2016.”

“While the Chancellor is right to have grasped the urgency of the competitive pressures UK steel companies are facing, he will need to go further to fully compensate companies for the disadvantages they face. A healthy domestic steel sector is vital to a strong and stable economy and it must be able to compete fairly in a global market.”

Stace added, “Until the whole compensation package is in place, we are competing with one hand tied behind our backs. Only the full compensation package will give us the ability to compete in this increasingly fierce global market.”

Largest Steel Producing Countries

Rank2014 (million tonnes)2013 (million tonnes)
Source: World Steel Association (worldsteel)
1. China 822.7 815.4
2. Japan 110.7 110.6
3. US 88.3 86.9
4. India 83.2 81.3
5. South Korea 71.0 66.1
6. Russia 70.7 68.9
7. Germany 42.9 42.6
8. Turkey 34.0 34.7
9. Brazil 33.9 34.2
10. Ukraine 27.2 32.8
18. UK 12.1 11.9

To illustrate the increasing competitive global steel market, gasworld looked at figures provided by the World Steel Association (worldsteel). Global crude steel production for the 65 countries reporting to worldsteel rose 1.2% last year over 2013, with Asian and Middle East production continuing to grow in prominence. EU production increased 1.7% in 2014, and for the UK in particular steel production rose 1.8% over 2013.

It could be argued, however, that such numbers don’t reveal the full story. Despite its year-on-year growth of 1.8%, the UK ranked 18th in the list of the largest steel producing countries in 2014, falling well short of the likes of China, the US, Germany and Ukraine, for example.

December 2014 crude steel production was also down 34% over December 2013 according to worldsteel, while this downward trend continued in February (2015) – down 4.8% over February 2014.

Missed opportunity

Meanwhile, there was a mixed response to last week’s Budget in terms of infrastructure development and renewable energies.

Philippa Oldham, Head of Transport and Manufacturing at the Institution of Mechanical Engineers, welcomed announced investment in both a new Energy Research Accelerator in the Midlands and the UK Centre for Collaboratorium for Research in Infrastructure and Cities. “These investments will hopefully help spur innovation and enable more joined-up cross sectorial thinking when developing new city infrastructure,” she explained.

However, Oldham called for the Government to ‘work hard’ to convince the public of the benefits of intelligence mobility technologies such as driverless cars.

The Renewable Energy Association (REA) also alluded to a ‘missed opportunity’ in spreading the commitment to renewable power and heat generation. Responding to the Budget, REA Chief Executive Dr. Nina Skorupska stated, “…our members will feel strongly that there was a missed opportunity to spread this commitment more widely to renewable power generation and renewable heat – both of which would thrive under a more stable regulatory framework which is fairer to smaller suppliers.”

“We challenge the next government to level the playing field for emerging technologies and create a policy framework which provides long-term certainty for investors.”