“Britain will be borne aloft by the march of the makers” – thus Osborne in June on rebalancing the economy away from the financial sector and towards a revival of manufacturing.    In fact the latter continues to go backwards, with production down again by 0.3% according to the latest figures.   And the Government’s own decisions fly in the face of Osborne’s boast.   After cancelling the loan to Forgemasters in Sheffield, it rejected the tender for the huge Thameslink train contract submitted by Derby’s Bombardier and gave it to Germany’s Siemens.   Not only does this lose 1,400 jobs in Derby, it puts at risk Bombardier’s whole survival as the only remaining train manufacturing plant in Britain.   Today Cameron has just rejected a last-minute appeal to reconsider the decision.   No other country in Europe would behave in this way in sacrificing one of its key industries.

This episode raises far deeper issues still.   There has been an almost panic reaction over the last 2 years about regaining financial sustainability following the bank bailouts, the hike in the national debt, and the rise in the budget deficit.   What is astonishing, and troubling, is that there is almost no reaction to Britain’s continuing manufacturing decline, the hollowing out of UK industry by cheap imports and domestic neglect, and the clear emergence of the country’s long-term economic unsustainability.   This ought to be a far, far bigger issue in current politics.

In 1970 manufacturing represented 30% of the British economy, now it’s just 12%.   It has declined remorselessly under all governments, first Thatcher but then just as steeply under New Labour when 1.5 million manufacturing jobs disappeared.   The decline still continues, down another 8% in the last 5 years.   As a result our trade balance has been negative for decades – the last time that UK exports exceeded imports was nearly 30 years ago.   The current balance of payments for this year,  even when the surplus in services has partly pulled back the yawning loss in goods, will still be a deficit of around 3% of GDP.    Britain is in deep trouble: both its private sector and public sector indebtedness is abnormally high and unsustainable, its trading deficits and economic unviability are unsupportable in the medium-long term, and there are no government policies in place (or even envisaged) which might even begin to turn round these trends.

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