Stephen King: There are other reasons for concern about the economy

Share
Related Topics

But it is not as simple as that. What we lose with one hand we gain with the other. Our oil prices are high primarily due to the strength of demand in the United States and in Asia from countries such as China.

China is using more and more oil as it develops and is now the second most important consumer after the US. But the reason China is so successful is partly because it exports a lot of consumer goods, including computers and televisions.

So this has not just resulted in higher energy prices for the Western consumer. They are also benefiting from cheaper consumer goods.

Because goods which were once made in Europe are now made in China, it is simultaneously driving down labour costs as it drives up energy prices. So China's success is also driving down overall prices.

Manufacturing employment in this country has gone down dramatically over the past 20 to 30 years. What we are experiencing now from China is no different from the threat from Japan and South Korea in the 1970s and 1980s. But manufacturing jobs have been replaced with other fields such as design or the media. The higher utility prices will certainly have an impact on companies. But, instead of pushing up prices for their customers, what companies have done so far is out-source labour to cheaper parts of the world. Once again, this has the effect of driving down labour costs.

These days, industry is so globalised it has the ability to withstand oil-price shocks. Companies are also more energy-efficient and do not use as much electricity.

There is certainly no suggestion that we are about to return to the dark days of the mid-1970s when petrol rationing was threatened. Frankly, there are far bigger reasons - such as the over-inflated housing market - to be concerned.

Stephen King is managing director of economics at HSBC

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Head of Marketing and Communications - London - up to £80,000

£70000 - £80000 per annum: Ashdown Group: Group Head of Marketing and Communic...

Nursery Nurse

Negotiable: Randstad Education Manchester: Level 3 Nursery Nurse required for ...

Nursery Nurse

Negotiable: Randstad Education Manchester: L3 Nursery Nurses urgently required...

SEN Teaching Assistant

Negotiable: Randstad Education Manchester: We have a number of schools based S...

Day In a Page

 

Ed Miliband's conference speech must show Labour has a head as well as a heart

Patrick Diamond
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments