Interesting article by Samuel Brittain in the FT. Apparently our relative decline was being reversed until very recently:

http://www.ft.com/cms/s/...0-b877-00144feabdc0.html

The question I was answering No to was that posed in the title of this thread -

Money v Making Stuff-Should Britain bid farewell to the golden egg of banking

I dont think that we should seek to exit the banking sector.

As I said above I'm not pro or against any sector, I'm pro good business and against bad. But I'm also against supporting the uncompetitive in order to create an ideal. I suppose you could conclude I am for the free market.

Nice idea to be like Germany, unfortunately it would require us integrating a significant new population of low paid workers as they did when they re-unified the old East, suffering fiscal austerity for a number years as they did when they paid the bill for that re-unification, and then benefiting from an artificially depressed currency due to being part of a monetary union that included fiscally irresponsible nations, whilst still having access to a ready supply of raw materials from within that currency block. Oh, and practising uncompetitive, and borderline illegal (in the eyes of the WTO) trade protection and corporate ownership policies to appease powerful unions.

Unfortunately the cause of much of their advantage is now coming home to roost as if as expected, France's sovereign debt is downgraded in the same way as the US, they will be left as the sole backstop of all ECB issued debt and given the unpalatable choice of paying out huge sums to maintain the Euro or seeing it collapse and watching a newly re-enstated DM sky rocket thereby dramatically reducing their competitiveness overnight, pretty much as the Swiss have just experienced. They'll still have a lovely big manufacturing base, making nice things. Unfortunately nobody else will be able to afford to buy them. With a smaller less well established financial sector and lower domestic consumption, there are serious questions over what that would do to their economy.

Good sausages and beer though.

Prof

Drawing conclusions from one month's figures that are sure to be revised is a waste of time. It would still be a waste of time if they were guaranteed to be one hundred per cent accurate. Trends over time are what matters.

My last point is made very well by your point on how perceptions of German re-unification have changed over time. Quite a lot of time on a human scale.

Just one ryder to the foregoing. If you wonder why the people of the World come to do business in the City, in my 40 years experience the oustanding feature was honesty integrity and having their contracts written by British lawyers subject to English Law (They liked and admired the Law of Equity in their cotracts) In addition structuring of contracts was part of the flexible approach to business. I remember a French Executive saying after a contract had beensigned"My word I do like the way you English drive!". Imaginative skills are all part of oiling the Worlds commerce to keep going, and it has a deep history in Britain. For those who are interested The Bank of England have historians working to publish the unique history off many institutions in the City.. Mistakes have been made by Politicians(The FSA for example) and a trendy influx of unskilled PHDs from Universities who had not studied the complexities of Banking, this allowed much long standing experience to be put out to grass resulting in serious trouble in Banking management. Just look at the RBS top management. There is no substitute for long EXPERIENCE. You cannot learn it out of a book. .In my day it was Bank apprentice to top management with on the job training and refresher couses lasting years until you were ready to be let loose at the Coal face. It worked and produced well run profitable Banks. Unfortunately the instant expert syndrome became very trendy in the 21st Century. A PHD in Anthropologh from Cambridge was perceived as an Excellent qualification to preside over an institution providing the most complex Financial services with all its attendant risks.

Prof

We need services and manufacturing. It is not a case of either / or. A strong service sector does not imply a weak manufacturing sector nor vice versa.

The answer to the title question is a resounding no.

If you have a broken arm the physiotherapist will warn you about left right dominance and advise that you do not get used to relying on the unbroken arm. They will advise exercising the broken arm as soon as it comes out of plaster until it is as strong and agile as it was before the break. Thus with services and manufacturing.