Outlook: Economic blues
Wednesday 28 April 1999
As yesterday's CBI survey showed, over the first four months of 1999, manufacturing jobs were disappearing at their fastest rate for six years. Things don't look too much better going forward - manufacturers expect to continue shedding jobs over the next four months, albeit at a marginally slower pace.
Taken as whole, manufacturing now accounts for just 20 per cent of UK output, compared with 25 per cent at the beginning of the decade. And looking ahead, there is little reason to expect any reversal of the sector's well-established of decline.
What does all this mean for policy? Clearly, the smaller the manufacturing sector becomes, the less able it is to exert influence - either directly or indirectly - over the level of interest and exchange rates.
In this sense, the decline of UK manufacturing has become a vicious downward spiral. Interest rate policy in this country is largely determined by our relatively large, and relatively buoyant, services sector. Manufacturers have for many months been stuck with an interest rate - and with an exchange rate - that is far too high for their own good and is primarily intended to curb a services boom.
The Bank of England's interest rate stance has merely served to catalyse the pace of manufacturing decline, and, in turn, to diminish further manufacturers' influence over policy.
Given that manufacturing is in the main - although not entirely - based in the north, and that services - in particular Britain's rapidly growing financial services sector- tend to be based in the south, the effect of all this will be to widen the north-south divide.
Eddie George, the Bank of England governor, strongly maintains that he was misquoted by a northern regional newspaper which reported him as saying that northern jobs were a price worth paying for keeping inflation down in the south.
Unfortunately, that is the truth of how the Bank of England interest rate policy works. Indeed, if the Bank is to meet successfully the Government's inflation target, it is the only way its interest rate policy can work. If Eddie George thinks he gets flak from manufacturers in the North-east now, he should just give it a year or two.
- 1 Woman 'suffocates newborn baby in plastic bag and puts it in her desk minutes after giving birth'
- 2 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
- 5 Chinese student carries disabled friend to school every day for three years
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...