Return of two-speed Britain

THE British economy is showing all the worrying signs of reverting to type. In spite of George Osborne’s fondness of being photographed in day-glo garb in industrial settings and his promise of a ‘march of the makers’, the only way they seem to be marching is overseas as the battle for Aga Rangemaster ( see

Page 68) illustrates only too well. The much vaunted manufacturing recovery is stuttering.

There are all manner of excuses for the stall including rout in Shanghai, an uncompetitive exchange rate for the pound and the eurozone hit from the strung out Greek crisis of early summer.

IMF managing director Christine Lagarde gave a preview of a more gloomy future to be laid out in the World Economic Outlook report with a warning of a growth downgrade as the ripples from China spread across the Pacific and the globe.

In Britain the worry must be that the strong contribution of trade to output in the second quarter could prove a blip. Manufacturing output is slipping towards the level at which it signals a contraction. New orders and export orders, both key indicators of future expansion, are tumbling. We may already be seeing signs of less confident business with the recent slippage in the jobs data. Contrast what is going on in manufacturing with the consumer side of the economy. Money and credit figures issued by the Bank of England show a 0.5pc rise in July.

Mortgage approvals reached 68,764 in July as borrowers took advantage of low mortgage rates.

An air of normality has returned to the financial sector and the Bank of England will need to be vigilant if credit conditions do not run away with themselves as was the case in the build-up to the 2007-09 financial crisis.

What looks to be emerging is a typical UK expansion that is far too dependent on the housing market and consumption, with an inadequate response from manu- facturers and exporters. Osborne is seeking to address the imbalance with his bold cuts in corporation tax and his backing for the ‘Northern Powerhouse’.

The political obstacles in the way of infrastructure remain as formidable as ever, as we are seeing with Heathrow, the Thames Tideway super-sewer and the like. Finance for start-ups is inadequate. The Business Bank is a weedy thing and cannot even begin to be compared to Germany’s KfW, America’s Small Business Administration, the European Investment Bank and similar institutions.

Concern must be that the Bank of England will have to raise interest rates earlier rather than later to help choke off a consumer boom.

That would force the pound up, making it even more difficult for manufacturing and exports to respond. It is a familiar tale and comes as no surprise that the FTSE 100 is so unsettled.

Aga daddy

INVESTORS in Aga will hardly believe their luck now that the share price has zipped up a further 12pc following the arrival of a second bidder for the iconic 175-yearold cast-iron cooker maker. Not so long ago the management was struggling to turn a profit and fund a pensions deficit. Now it has the attention of American rival Middleby and the Michigan-based white goods giant Whirlpool.

The embrace from across the Atlantic must be very nice for the Warwickshire- based firm but whether the Mid-West psyche is suited to preserving the heritage of ranges that adorn Britain’s finest country houses and cottages is a big question. Aga is not just an oven brand but a lifestyle choice that includes a number of other totemic British brands, including Fired Earth and the stylish kitchen stores Divertimenti.

What it really needs is a friendly British billionaire to arrive as a white knight. It ought to be just the kind of thing to interest Sir James Dyson who is into both kitchen appliances and the countryside. Such a venture might have once have appealed to Sir Richard Branson before he caught the space bug. Maybe Indian holding company Tata, guardian of Jaguar Land Rover, maker of steel and keeper of the Tetley tea brand could take an interest.

Something so quintessentially British needs to be preserved for exports and the nation.

Carry on caravanning

AT least that other monument to British lifestyles, the caravan park, is to remain firmly embedded in our landscape. Thanks to the intervention of Electra Private Equity two of the nation’s biggest owners Park Resorts, controlled by Electra’s venture capital fund, and Parkdean, controlled by another private equity firm, Alchemy, are to come together. Both will take stakes in the new business that will own 73 sites and have an enterprise value of £960m. As part of a complicated refinancing Electra plans to extract £100m of cash for its investors.

That should keep its combative activist investor Edward Bramson of Sherborne, which holds a 29pc stake, a little sweeter.