Prof, Doc and others

This recent stock market volatility has little to do with manufacturing vs services. We are caught in a lack of confidence environment created by political stalemate in both the EU and US and a reluctance to actually confront the problems of unsustainable budget deficits. Europe can only really be solved by either the end of the Euro (allowing Club Med to default, devalue and clean the slate) or full integration with transfer payments from Germany to the deficit economies and control of fiscal policy going the other way. NB Germany can bail out Portugal, Ireland and Greece from there own current account surplus and reserves if they so desired. The US just need to stop spending more than they earn, through gradual (rather than sudden) fiscal rectitude.

To stay with the initial thread, the UK continues to perform reasonably well considering although SME confidence is slipping suggesting that investment by firms is likely to slow

http://www.myfinances.co...s-as-confidence-dips-cb

On the flip side though here are some quite nice headlines, the UK is the 6th largest in the world by GDP, the UK is third largest in terms of both inward and outward direct investment, London is the worlds largest financial centre (2nd to NY on some metrics), our aerospace industry is 2nd or 3rd largest, our pharmaceutical industry is 3rd in the legal table of R&D, we are 4th on the league table in terms of ease of doing business, in 2008 we were the 6th largest manufacturing nation in the world.

If we are 6th in manufacturing, I think its a bit soon to be lamenting the end of the industry, the 2.6 million people employed in this sector might point to the approx £140bn of gross value added to the economy as quite a contribution.

Final point, UK banking and financial services is also one of the largest contributors to UK balance of payments as a significant amount of the activity is considered exports (banking services to overseas companies etc)

Feel free to check Wiki and ONS sources if you think I've made any of this up

Controversial I know but here’s a thought - we need to stop being so down on ourselves and start to realise/appreciate/celebrate what we have got which is actually pretty good. By the way UK Gilt yields have fallen considerably, suggesting that global investors consider the UK a safe haven.

Well done Jeremy, fully agree

Its almost worth a rousing rendition of Rule Britannia.......

Not a good day to own shares though. I'm off to the pub.

Prof

If wishes were deeds princes would be kings
If wishes were horses beggars would ride.

An American view on their similarly troubled economy:

Increasing Productivity and Boosting Wages: Is Innovation the Answer?
http://www.brookings.edu..._greenstone_looney.aspx

Think that the GBP falling by 25% vs USD over the last 3 years will have affected our position in the league table of manufacturing as the numbers are reported in USD

As said before, a massive government overspend for a number of years was a significant contributor to our sluggish economy, much more so than the money attributed to buying Lloyds, RBS, NR etc which is marked down as an asset on our national finances and therefore doesn’t feed into deficit numbers. As credit fuelled property bubble also helped, but blaming the banks for that is like blaming your local landlord for you having a hangover. Admittedly the landlord did offer a number of cheap drink deals and had some very pretty posters outside the pub, but at the end of the day, those who decided to enjoy the drinks must take some responsibility (another drinking analogy, there’s a theme here)

There’s no doubt that the job losses in Derby will have a terrible effect on the local community but we need to keep some perspective. 4400 redundancies represent less than 0.2% of the 2.6m manufacturing jobs in the UK. In the last 2 weeks, 43,000 redundancies have been announced in the financial sector in London alone. Conservatively job losses from this sector in total this year are expected to top 300,000. We are in a downturn. That’s what happens and everyone is taking some pain. The public sectors turn will come next. With any luck, other employers will see the potential of Derbys workforce, like Egg, Toyota etc have in the past and many of those who are looking will find work.

Yes, there is a difference between North & South, basic geography, helping the labour force to become more mobile, and reskill where appropriate would be a more straightforward solution than subsiding jobs in inefficient industries.

Am thinking of a chaser with my beer, given the calamity going on in the worlds financial markets. Those of you who wish to see a smaller services sector may well soon get your wish…… and it will cost us all dearly.

Clearly we must agree to disagree Prof

I agree that falling GBP can be a good thing for business, although clearly it has also been the major factor in a jump in inflation as imported raw material and food prices hike by the corresponding amount which has the knock on effect of both reducing domestic demand and raising manufacturing input prices, both of which hurt businesses that manufacture. Double edged sword in currency devaluation.

I also understand that the lag involved in R&D, capacity creation and tooling up production to boost exports would easily explain the slip down the league table despite the beneficial effects of a failing GBP, especially when it takes place over a 3 year period of dramatic global deleveraging and falling demand.

I have never suggested that banks are innocent, quite the opposite in fact, but my central premise is that we all deserve a share of the blame. Anyone who "stretched" themselves to buy a bigger house than they need, or self certified their mortgage to boost their ability to borrow, or who massaged there income figures for their mortgage application, was a party to the group-delusion that property prices only go one way. I blame Kirstie and Phil on Location, Location, Location for stoking the fire.....

Again I never said that the Derby redundancies were not serious, in fact I clearly said that it will “have a terrible effect on the local community”, but I also suggested that you consider that Derby will not be alone in taking some pain. There is also an expectation of most of the financial service job losses will come in London, plus a significant number of public sector roles. 300,000 in a City of 7,000,000 is over 4% but clearly there are more opportunities and vacancies in London, so the newly redundant may find it easier to find a new job. Interestingly the ONS says that there are more than 450000 current vacancies in the UK.

To come to your final point, I think your wish differs from mine. I wish that bad BUSINESSES are reduced and good BUSINESSES replace them, I am agnostic to what sector those businesses inhabit.

Forgive me if I misunderstand English, but I thought that the title of the thread poses a question…… a question that I think the answer should be a firm NO.