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Manufacturing avoids slump

Despite concerns over Brexit and what it might mean for the future of the UK economy, the manufacturing sector continues to put up a strong performance. The final Office of National Statistics (ONS) manufacturing figures for 2016 show that output increased by 2.1 per cent in December.

The latest set of figures were the latest to show an upward turn for the manufacturing industry, and optimism in the sector is at its highest levels for two years, according to data released from the CBI.

The ONS attributed the increase in December’s figures to the performance of the pharmaceutical sector. Industrial output also exceeded expectations at 1.1%, and both imports and exports also showed growth through 2016.

Exports are performing well

A strong performance in exports were also reflected in figures released by the CBI.

A survey of more than 450 manufacturers revealed that exports are growing at their strongest rate for nearly 3 years, and businesses say they are more optimistic about their prospects.

According to the CBI industrial trends survey, UK-based businesses also reported strong domestic orders over the previous quarter.

Commenting on the figures, Rain Newton-Smith, CBI Chief Economist, said:

“UK manufacturers are firing on all cylinders right now with domestic orders up and optimism rising at the fastest pace in two years.

“The weaker Pound is driving export optimism for the year ahead, but is having a detrimental impact on costs for firms and ultimately for consumers.”

SME manufacturers show strong growth

The latest SME Trends survey from the CBI showed new orders growing at their fastest pace since 2015 and manufacturers stated they were optimistic about new orders going forward. However, they did expect to come under strain from pricing pressures in the future due to the low price of the pound.

Industrial strategy gives further boost to manufacturing

The manufacturing sector was also given a boost by the announcement of the government’s industrial strategy. The strategy pledges to support business and encourage trade, while encouraging innovation and providing an effective infrastructure to help businesses succeed.

A strong industrial strategy is something the manufacturing sector has been calling for. In late 2016, a report from the EEF showed most manufacturers aimed to achieve growth, and most of them had a plan in place to do this.

However, the EEF made clear how important it was for the government to have an industrial strategy in place to support this growth if manufacturers are to realise their goals.

Wind power generates more power than coal

Wind power is now generating more electricity than coal, according to the latest set of figures. In 2016, wind power created 11.6 per cent of our electricity, which means a quarter of our energy supplies now come from renewable energy. The figures have been welcomed from RenewableUK, who said:

“This is a historic and exciting change to our power infrastructure. As old-fashioned coal is phased out, modern technologies like wind are stepping up to make sure consumers have reliable energy without the damaging health impacts of coal pollution - as well as delivering for the UK economy.”

The declining use of coal

The statistics, which were compiled by Carbon Brief, show a steep decline in the use of coal. During 2016, coal generated just 9.2 per cent of our electricity; this is part of a downward trend which has continued over several years.

The government has opened a consultation to obtain views regarding ending unabated coal generated in Great Britain by 2025. Instead, the government wants to focus on cleaner forms of electrical generation to fuel Britain into the future. Phasing out periods are already underway and several UK coal plants were shut throughout 2016.

Wind power in Europe

The patterns for Europe have been similar to that of the UK. In Europe, again, wind power now leads coal in power generation, and wind power is now generating more than 10 per cent of Europe’s electrical needs.

Renewable energy targets missed

However, despite the record breaking figures and the attempts by government to find cleaner means of power generation, it is still set to miss its 2020 targets for renewable energy.

By 2020, the aim is to have 15 per cent of our energy produced from renewable forms but the Energy and Climate Change Committee say the government is not likely to achieve this.

Although the government is likely to exceed its goals for renewable electricity generation, it has fallen behind in its efforts on renewable energy used in heat and transport, and it is being urged to act now if it is going to meet its goals for lowering carbon emissions.

Renewable energy and transparency

In the meanwhile, the government has been warned that it is not being transparent enough with consumers regarding the costs of renewable energy sources such as wind power. As reported in the Guardian, a Commons Select Committee Report has said that consumers should be advised of the costs and savings of such schemes so they can decide for themselves if they offer genuine value for money.

Government announces £28 million towards low carbon energy innovation

As part of its aim to reduce energy costs and to reach targets that will help the UK lead the way in low carbon energy, the government has announced £28 million of funding toward low carbon energy innovations. The money is being made available as part of the governments industrial strategy, which was announced recently.

The green paper detailed the need to find alternative energy sources to ensure that the UK meets its targets for lower carbon emissions, while lowering energy costs for consumers and businesses, and securing UK energy sources into the future.

The initiatives will include investment into offshore wind projects and smart projects, as well as reducing the amount of energy used by industry. The funding is part of the government’s wider support for energy innovation.

Commenting on the new funding, Nick Hurd, the Minister for Climate Change and Industry said:

“Innovation in energy will play an important role to shape our low carbon future to rebuild an outdated energy system. That’s why we’ve increased our financial support, helping to create jobs and opportunities for people across the UK.”

Some of the funding is to be spent on feasibility studies regarding energy storage, while £9 million is being offered to companies if they can offer innovations that will reduce the amount of energy used by UK industry.

No support for solar

The funding has been welcomed by renewable energy groups, however, environmentalists had been hopeful of seeing more support for solar power.

The UK’s solar power industry had already been impacted by a cut in subsidies, which resulted in significant job losses and some firms moving out of the UK. The lack of support for solar in this latest announcement is likely to be greeted with disappointment by environmentalists.

Wind power vs Nuclear

With the use of coal dying out, lower carbon alternatives like wind power and nuclear have been dominating the energy market.

Wind power will receive further investment through this latest round of funding and nuclear power has also received government support. However, one of the biggest concerns is whether either of these alternatives offer the consumer a good deal.

The EDF Hinkley Point C nuclear plant has been given the go ahead but will cost £92.50 per megawatt hour. However, it is argued that this doesn’t give the consumer the best value but could alternatives like wind power could offer consumers a fairer price?

Hugh McNeal of RenewableUK told the Guardian that wind power would reduce energy bills more than nuclear power would, and this a debate that is likely to go on as the UK continues to explore its future energy options.

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