Making Things

It was revealed at the end of last week that Britain had a trade deficit in goods in July 2010 of £8.7 billion. The surplus on trade in services was £3.8 billion giving us an overall deficit of £4.9 billion. Over the three months to end of July we had a net deficit on goods and services of £13.2 billion - which is the highest figure since we started keeping statistics in 1700. Impressive, isn't it. If we continue in this way for a year we will have an annual total deficit for goods above £100 billion. The value of the pound sterling has dropped by 25% and this was supposed to make our exports more competitive. The trouble is that it makes imports more expensive and because of the dire state of our manufacturing industries we have to import almost everything. And that stokes up inflation which devalues the pound even more unless we put up interest rates to attract foreign investment. It's a mess and a desperate mess at that. How we are going to get out of it, I have no idea. For starters, we need government ministers to tell us that they really do understand the problem and then to say how they are going to re-build manufacturing so that we have something to sell.

Throughout the years of the Labour government manufacturing has declined very considerably and we have kept the economy afloat on borrowed cash. Now the debts, like chickens, have come home to roost and they have to be fed with massive interest payments. Manufacturing declined under Mrs Thatcher's government - less so under John Major - but when the Tories left office in 1997 there was a small surplus on our annual trade figures. Manufacturing may have fallen from 27% of GDP to 22% during 18 years of the Tories but Labour managed a cut of 50% [from 22% to 11%] in 12 years.

We are repeatedly told by accountants, financial wizards [you know - the people who buggered up the World's economy in 2007/2008] and by politicians that we are no good at manufacturing. It's not true and it never has been. What we are not good at is investing in education [proper education], in technology and in large scale manufacturing. Until 1983 we never had a trade deficit at all [except during wars] but since then we have been going further and further into the red and our currency goes down and down. I can remember when we had about SFr 5.0 to £1.00; now there are SFr 1.57 to £1.00. Buying a box of Swiss chocolates is three times as expensive as it was then Even more unbelievable is the total decline since WWII; in 1948 there were US$ 4.00 to £1.00 and SFr 17.5 to £1.00. USA has gone down as well, of course, because they have been managed by the same economic and financial experts who have guided us towards ruin. Now US$ 1.00 is about SFr 1.00. The only group in both countries [UK and USA] that have done well have been the financiers

I was never impressed by the privatisation policies of Thatcher. She was wrong then and the 20 years since her demise have proved it. Selling off our essential services - water, gas and electricity have blighted these industries. Privatisation of the railways - John Major's only big sell off was crackers and, brilliantly, we now provide much bigger subsidies than we ever did when it was publicly owned. Only a banker could come up with a scheme like that. If we make a profit, it's ours; if we make a loss, it's yours.

These days our oil and gas outputs are declining and this will make the figures steadily worse unless something is done. The Coalition Government is intent on cutting government debts and in that, I am sure it is right - we can't carry on lashing out £40 billion per year on interest payments on the debt. But they have to do something positive so that we can make products that people want to buy.

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