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Nationalising Tories

Robert Peston | 13:33 UK time, Friday, 9 January 2009

If there was even a scintilla of doubt that we're in a very painful recession, that doubt must be eliminated by the release today of statistics on manufacturing output and industrial production in November.

These were truly shocking.

The seasonally-adjusted output of all UK production industry in the penultimate month of last year was a staggering 7% lower than in the same month of 2007.

For the smaller group classified as manufacturers, the fall was even worse, at 8% year on year.

Brand new Nissan vehicles are parked up awaiting loading onto ferries to be distributed worldwide from Tyne Dock, South Shields, Friday Jan 9 2009Of course it's true that industry is not as big a proportion of the British economy as many would like it to be. But it contributes around a fifth of our entire economic output.

And that fifth of the economy is contracting at an annual rate of 8%.

The picture is even more alarming when examining the manufacturing figures in more detail, and looking at output in the three months to the end of November compared with the previous quarter.

There were falls in 12 of the 13 manufacturing sectors. Worst hit were wood and wood products, which was 6.7% lower in that quarter; transport equipment, down 5.7%; and basic metals, also 5.7% lower.

Only the relatively recession-immune food, drink and tobacco sector recorded an increase - though its rise was an anaemic and statistically insignificant 0.4%.

As for the 77% of our economy that's represented by assorted services: well, many of those - such as our banking and financial businesses - are in a conspicuous mess.

That said, the pre-Christmas hysteria about the meltdown of retailing was overstated (though the shopkeepers have themselves to blame for this hysteria, with their characteristically neurotic seasonal gloom about their prospects).

The true story of non-food retailing is that it was generally bad in the run-up to Christmas, but lethally bad only for a few. Those stores perceived to offer staggeringly good value performed better than the rest (yesterday's figures from cheap-and-cheerful Peacocks were particularly impressive). And food retailing was the exception to the generalised fall in sales.

However, forecasters who have been estimating that the UK economy contracted by an unpleasant 1% in the final quarter of last year may turn out to have been optimistic.

But to return to manufacturing for a second, this country will pay a heavy price for years to come if this economic contraction leads to a permanent loss of firms and productive capacity.

We've learned to our cost the perils of being exceedingly dependent on growth from the City, from financial services. It would be a double indignity if an economic crisis created in the financial sector should wreak the most harm on manufacturers - and make our economy, and our prosperity, even more dependent on services.

So it's more than a small mercy that those horrible job cuts announced yesterday by Nissan are being implemented in a way that should not lead to an irreversible loss of skills and shrinkage of its manufacturing potential.

Even so, there's a role for government, to prevent the chronic shortage of credit in the economy - which is the precipitator of our misery - from wreaking devastating harm on viable firms.

The Treasury has already announced taxpayer guarantees to support £1bn of bank lending to small businesses and a further £1bn of working-capital finance for small exporters. And it's working on a more substantial scheme that would involve taxpayers sharing in the risk of much more lending to companies.

What's finally announced won't be trivial. But the Tories complain that the government has been too slow and unambitious in providing such succour.

The shadow chancellor, George Osborne, today called for a three-pronged strategy to stimulate the flow of credit: state insurance for £50bn of lending to business; a cut in the cost of the capital that's been provided by the Treasury to banks and also a reduction in the fees levied for guaranteeing interbank lending; and a new Bank of England facility to swap corporate loans for cash.

This would amount to a substantial extension of the nationalisation of the credit-creation process - and Osborne acknowledges that more draconian nationalisation may yet be necessary.

It's quite something when the Tories complain that a Labour-controlled Treasury is being too cautious in rolling back the boundaries of the private sector and too feeble when pumping up the role of the state.

Update: Apparently I was the only person in the UK who had never heard of Sportacus. My shameful ignorance ended yesterday when I met this rock-solid pillar of the crumbling Icelandic economy on Simon Mayo's 5 live show. Click below to see me going to LazyTown.

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  • Comment number 1.

    In 1997 the Labour government stole the tory government from under their feet, is the reverse about to happen? Labour have been left with NOWHERE to go, they are O.U.T, and you’ll be lucky if they EVER get in again Peston!

  • Comment number 2.

    it's time to discard the rat race mentality and dependance on materialism that the modern world has become, which is a good thing really

  • Comment number 3.

    Why do the government not give loans/grants directly to businesses?

    They have given billions to the banks which has not achieve anything for anyone other than the banks. Furthermore, it is hardly likely to. If the government loans to the banks at 12% then if would be a fool that lent that money out to business at only 2%!

    The prospect of "Quantative Easing" is a further move in the wrong direction. Everyone knows that this is nothing more than printing money in effect. However, Quantative Easing gives that money straight to the banks - again! They would be better off not being so deceptive and admitting to printing money, and then using the money for business grants and public works spending so at least us ordinary people see some benefit of it!

  • Comment number 4.

    It would be so much easier if Flash just paid off everyones debts so the bubble can start again, I am sure China, Japan and Germany would be happy to chip in, as we are no use to them the way we are now.

  • Comment number 5.

    Ouch. This news puts the complaints about the 'realist' contributors (or, negativists) into a proper perspective doesn't it?

  • Comment number 6.

    Mr. Peston cannot help but betray his own political allegiances when commentating on Tory policy. Don't get me wrong, I am no massive fan of Cameron and co., but I for one am glad they are abandoning out-dated political mantras to try to find creative solutions to this crisis. Particularly as they are likely to be running the Government within the next 18 months. I also agree with all three of the measures outlined. Does Mr. Peston have a view other than they are bit rich coming form the Tories? It would be nice to know.

    I'm also afraid that blaming the gloomy retailers he spoke to for calling Xmas sales so wrong is also rather lame. As for only the "staggeringly good value" retailers doing well. John Lewis? Sainsburys? I don't think so. He's talking to the wrong people maybe, or only taking notice of those who express a gloomy view.

  • Comment number 7.

    ##1 "Labour have been left with NOWHERE to go, they are O.U.T, and you?ll be lucky if they EVER get in again Peston!"

    The trouble is people forget as they forgot what happened the last time they were in, unfortunately I do not see a Margaret Thatcher this time round.

  • Comment number 8.

    The shadow chancellor, George Osborne, today called for a three-pronged strategy to stimulate the flow of credit: state insurance for £50bn of lending to business; a cut in the cost of the capital that's been provided by the Treasury to banks and also a reduction in the fees levied for guaranteeing interbank lending; and a new Bank of England facility to swap corporate loans for cash.

    Is the provision of state INSURANCE for banks lending to business Nationalisation of the banking Industry? NO

    Is a cut in the cost of capital (currently 12%) being provided bythe government (no change in equity swaps) Natioanlisation of the banking industry? NO

    Is a reduction in the cost of fees levied for guaranteeing interbank lending Nationalisation of the banking Industry? NO

    Is a facility to swap corporate loans for cash nationalisation of the banking industry? NO

    Someone is talking out of their backside and it ain't me!

  • Comment number 9.

    I fear the British government will struggle to borrow all the money it needs.

    From an article in the Financial Times on 8 January 2009:
    “A German sovereign bond auction failed yesterday, as investors shunned one of the safest and most liquid assets in the world, in a warning for governments seeking to raise record amounts of debt to stimulate economies. Britain is planning to raise GBP 146bn this financial year – which is three times more than last year”.

    Despite what Alistair Darling says to the contrary, it is looking increasingly likely the British government will eventually resort to printing more money............with all the serious economic risks that entails.
    However, on the other side of the fence, some economists say this crisis will not be beaten by “restraint”.........

    Individual economies contain competing forces, and only time will tell which forces turn out to be the stronger. What works for one country may not work for another. The USA may be able to get away with printing money, as the dollar is the world’s reserve currency and accounts for a very large percentage of the world’s foreign exchange market.
    Britain, although experiencing similar economic problems to the USA, may not find the same policy of printing money to be successful, given that sterling only accounts for a small percentage of the world’s foreign exchange market.

  • Comment number 10.


    Manufacturing cannot recover with the pound at such high levels against Asian currencies.

    Yes - High Levels.

    We may have crashed against the Euro and against the Dollar (not so much of the latter), but not materially against Asian currencies.

    No UK manufacturer can compete at anywhere near current levels.

    We need a major Sterling devaluation against the Chinese Yuan.

    Until that happens, underwear manufacturers, cup manufacturers, furniture manufacturers, etc, etc, etc will continue to close UK production sites and transfer production out to Asia, and UK manufacturing will get smaller and smaller.

    This required devaluation will cause major inflation in the UK, short term shock (!!) and disruption, but will save this country. Without this shock, we are gone for 70 to 100 years.

    Bring on the Yuan-Sterling devaluation 30% now !!

  • Comment number 11.

    Talk of nationalising the banks is just hysterical stuff.

    However, the government needs to get its finger out in supporting and funding credit flows. It is now three months since the bank bail-out and credit is still frozen.

    Osbourne is right in his comments although he has been very slow on the uptake. He doesn't sound very connected to business in any way shape or form which is odd given his family background in shapes and forms.

    What we have to accept is that we are still in the early days of the recession (slump?). The banks were obviously hit first, then came retail and media, now we are further up the supply chain and eating at the really serious bit of the economy. It won't end there either.

    Until credit flows are restored the asset crash will persist, the economy will contract and government income fall. In its own interest the state has to get the credit moving but it seems quite impotent.

    The need for a smaller, more effective state is now proven in my eyes.

  • Comment number 12.

    Industry accounts for 24% of GDP.

    A fall of 7% equates to a drop in GDP of 1.6%

    1.6% was Captain Darling's prediction for GDP contraction for all of next year before recovery lifts us into sunlit uplands.... etc etc

    1.6% a month is equivalent to c. 17% per annum.

    Thank God we are "best placed to whether the global economic conditions" or whatever our Glorious Leaders claim.

    I suppose there is one gem to all this - the situation will get so bad that the more the BBC and their ilk fail to point out the shortcomings and malfeasance of this government then the greater their fall from grace will be. If the Labour party lost an election now they may survive; continuation in office could see their eradication.

    Then again it is possible that Peston and the other government apologists are closet Tories working from the inside...

  • Comment number 13.

    Don't worry Robert you're not the only one who knows nothing about 'sportacus'. On more gloomier note, it really looks like we're falling off a cliff here. It seems unlikely that the long ignored manufacturing sector is going to drag us out of this mess. I just don't think that many our manufacturers are capable of handling a prolonged collapse in the economy. Won't be long before we see 'tent cities' emerging on the ravaged outskirts of our once great cities. Well may maybe not, mmmm on second thoughts you just never know...

  • Comment number 14.


    "In 1997 the Labour government stole the tory government from under their feet, is the reverse about to happen? Labour have been left with NOWHERE to go, they are O.U.T, and you?ll be lucky if they EVER get in again Peston!"

    Unless Crash manages to pull something dramatic out of the bag - a war that we win anyone? - thsi shower are heading for an electoral meltdown on a larger scale than the Tories had in 97 - I could see about 100 Labour MPs left after the next election.

    I wonder who all of the trendy, pretend socialists will vote for now?

  • Comment number 15.

    #1 I agree that brown and co have made a right hash of the economy, but if you think that wet behind the ears Cameron, baby face Osborne and their cronies can do a better job then you are seriously deluded.

  • Comment number 16.

    Robert whenwill yopu and James Naughtie (hope thats the right spelling), and in fact the rest of the BBC staf, just give up and wear bright neon shirts saying "Labour Spokesperson" .
    the saddest thing is that all credibility of the BBC is rapidly out the window, very few people either Labour supporting(glad of the fact) or Tory, or Lib Dem or not aligned (basically everybody except those a the institution still trying to kid everybody) believe the BBC is anything but an apologist / mouthpiece for the Labour party, its both pathetic and sad all at the same time.

  • Comment number 17.

    Robert, I hope you show more reverence to Brownacus than you did the star of Lazy Town. After all Brownacus really is the saviour of the human race (And not Lilly The Pink as some believe).
    He can out jump, out summersault and do more U turns than Sportacus ever could. And if the massess can't believe that: Brownacus says he can, so it's true.

    PS Will this be intercepted by HMG?
    Don't want a visit from the e-mail police.

  • Comment number 18.

    What's the short-medium-long term plan from the Labour Party then RP?

    Keep plodding on as usual in the face of everything and hope it all 'comes good'?

    Any word on where we're going as a country?


  • Comment number 19.

    So who is UK's Sportacus, Alistair Darling or George Osborne?
    Who is USA's Sportacus, Joe the plumber or Obama?
    Wall street's Sportacus, Madoff would be behind the bars soon.

  • Comment number 20.


    What you may see here is a short Tory tenure followed by a Miliband labour one, watch this space (Things ARE that bad). I say this because the public may lose patience with the time it would take anyone to sort this mess out!

  • Comment number 21.

    Perhaps Mr Brown likes things the way they are, false mumblings that they will make the banks lend more and reduce rates. Maybe he wants them to keep the borrowing rates high and pay those "Savers" who he seems to despise, dirisory rates. Let the banks build up their funds nicely from funds he cannot usually get to, the prudent majority who dont spend for spendings sake. He can then have his money back and his beloved taxes from the banks.

    This Government will do anything to save its own skin before the countries future.

    Disasterous and getting worse

  • Comment number 22.

    They are all very slowly starting to clock the inevitable.... which is that the banks, during the first round of recapitalisation, have simply not been honest about their positions, just as they have not been at all honest throughout this whole debacle (they are just too scared of the mess they have got themselves into to come properly clean), and the only solution is to recapitalise further, if necessary ultimately nationalising them to go for a full Swedish solution.

    Companies that mess up to such a large extent really should go bust, except that we can't let that happen to banks, so this is the only solution.

    The government will then be in a very good position to organise a completely new financial system, which we desperately need, based around open book/transparent banking.

    And shareholders will be careful in future never to go near a bank that does not conduct its business rather more prudently.

  • Comment number 23.

    Even if our industries had the cash to operate , they still cannot compete with the rest of the world. Overblown salaries to directors, dividends to shareholders, EU regulations and the demands of the unions see to that. We need a fundemental change to the way industry is run in this country so that an operating profit does not mean attempting to take the customer to the cleaners. Likewise in the retail sector, particularly in electricals and white goods, where the much vaunted " sales " were a non event, with a few reductions on old model commodities and extortionate prices being maintained on everything else. The high street still has to learn that the customer is more important than the size of the profit margin, as is demonstrated when a company announces its profits of £300million are down by 3% and shrieks of shock and horror ring through the media as though the world had come to an end.

  • Comment number 24.

    nationalisation is all very well. The treasury has ideas for a bad bank - this has its own probelms.

    creating credit is the government's job though; at the end of the day it does print/create the money. The Tories are suggesting the government fulfill its role a little better.

    Having said all of that I worry that the world may pick choose bad country rather than a bad bank.

  • Comment number 25.

    It's no good giving out more credit if we are not competitive - its like backing a 100/1 shot at the start of a race and then when it is last and gone lame betting some more money on it.

    Investment (well targeted) may help but more credit - NO NO NO.

    As regards high street spending - of course it held up during the pre Christmas rush - but the credit card bills are in now and there's no stock in the shops.

    Interestingly in some ways the property sector has borne the brunt of the slump in that this is where prices have collapsed - if they could get them down another 20% and quickly then this is where the recovery could start - there are a lot of people out there with money who don't know where to spend it who wouldn't really need a significant mortgage if they felt the price was right.

    We need a period of adjustment - this will be far less painful if we don't fill the credit void and get on with the pain - then we will hit the bottom and THEN all these billions may come in useful - now its just going down the drain and stopping us falling off the cliff that sadly we need to fall off.

  • Comment number 26.

    Robert says:
    Even so, there's a role for government, to prevent the chronic shortage of credit in the economy - which is the precipitator of our misery - from wreaking devastating harm on viable firms.
    This raises a number of issues

    1. Why, in a so-called free country, is there a role for government to get involved in credit creation?
    2. How might the government do this given that they have no ability to create real wealth. They merely have controls that allow re-distribution of existing wealth.
    3. Surely the creation of fake-credit is the precipitator of ‘our’ misery. If so, how can government creation of more of the same be the cure? Even if it were, how long would you expect a future boom to last before we were plunged back into a similar crisis?
    4. How do you define a viable firm? Presumably you would use different criteria to their non-lending bank.

    There is only one solution to this mess. It is to revert to a sound, non-manipulated monetary base and to allow market forces to determine sustainable asset values as quickly as possible.

  • Comment number 27.

    excellent double-barrelled blast of gloom there Robert!

    whilst some people blame you and other messengers for CAUSING the downturn (a ludicrous claim IMO) I would have to say that, if anything, even now there is still a lot of complacency about just how severe the situation is for the world's economy

    a 7% annual decline in UK manufacturing is scary enough but it was 2.9% in November alone if I'm reading the report correctly

    you can add to that the figures for Spanish industrial output, which are down a staggering 15% (annualised)

    and the US unemployment figure has just appeared: up 524,000 in December and the figures for Nov and Oct adjusted upwards by 50,000 and 100,000 respectively; and they say that the layoffs there are ACCELERATING now; the next 3-6 months are going to be very worrying over there

    and the news from South Korea; and the Chinese are apparently sending signals that they feel the need to spend their trade surplus money at home, so don't intend to carry on buying US treasury bonds etc

    overall, let's face it, we have fallen off the cliff already and tinkering with interest rates etc are not going to stop us hitting the ground; how much will they slow our speed of impact? nobody knows

    but here's one suggestion for starters:


    so bring Vince Cable onto the govt front benches and get Brown and Darling to work with the equally risible Cameron and Osbourne

    let them all sit on the small sofa of cross-party love a la Dianne Abbot and Michael Portillo; who knows, it might even help them to think of some workable policies to use in this crisis

    IN FACT THINGS LOOK SO BAD THAT I'VE DECIDED TO RELEASE YOUR OIL TANKER, ITS 2 MILLION BARRELS OF BLACK STUFF AND CREW INTACT; and all for a modest ransom of $3m (which I have not deposited in a British bank BTW)

  • Comment number 28.

    I said in this blog in August that all the government had to do was guarantee bank loans (following normal due diligence) I still do not see why that is not at least part of the answer

  • Comment number 29.

    "Even so, there's a role for government, to prevent the chronic shortage of credit in the economy - which is the precipitator of our misery - from wreaking devastating harm on viable firms.....""""


    There is not the role or a role of government. If a firm is viable then credit is not a problem.

    The precipitator of (some peoples or firms) misery is the amount of debt that needs to be paid back not the lack of credit available.

    There is a major difference, Robert. Those that have SURVIVED on credit now have to survive on cashflow.

    A major role for government would be to ensure in law that ALL invoices have to be paid within 7 days. Problem would then be over for viable and prudent entities

  • Comment number 30.

    #27 - I see you've released that tanker so presumably you've got a few more bob available now?

  • Comment number 31.

    So manufacturing output has fallen by 8% in November 08 compared to the previous year. If that were true in our case we would performing cartwheels and other assorted acrobatic activities.

    We are a SME manufacturer in NE England and I can tell your our corresponding reduction is 38%!

    For the year to November our turnover is down a mere 21%, but since we did not begin to feel the full effects of the recession/depression until early last summer we fully expect to rapidly accelerate towards a full year 30% reduction or worse.

  • Comment number 32.


    "Talk of nationalising the Banks is just hysterical stuff"

    If that's the case, surely it would be a perfect fit with whats been going on for the last while then!!!

    So lets get fast cycle on it!!!

  • Comment number 33.

    Why would banks want to lend money at very low rates of interest even with a government guarantee when at the same time they are paying 12% on money borrowed from the government.

    This is a loss making proposition. If it were me i would hoard my cash in order to pay back the government as quick as i could and in the meantime only make the most safe loans with real margins.

    Oh that is what the banks are doing. Lets call a spade a spade. They might be stupid but not that stupid. Forcing them to do so is just a form of price fixing. This never works because fixing the price of a commodity and that absolutely includes money at a level that the supplier cannot make a profit guarantees no supply. Hence low interest rates below a certain point only ensure the government becomes the main provider of capacity and this must print.

    Nothing was ever going to stop this deleveraging and we were always going to end up with central governments printing money with gusto combined with some kind of banking nationalisation. It is strange to see all the analysts saying the reason for the 'Great Depression' was the action or lack of action taken by central banks at the time and now confidently telling us all this action now will lead to a different outcome. These same analysts Kaletsky and David Smith etc who could not find their backsides with both hands and were waving away any chance of real problems until now.

    Printing money will make no difference. It will simply redistribute pain. Less here more there. It will distort insentive in favour of yet more public spending and compete unfairly with much healthy private employment. In the end the depression will last as long as it takes and life will go on.

    What analysts forget to tell us is that previous financial disasters (see 19th century) were tackled with lots of money printing. This idea was rejected in 1929 because they wanted to avoid the mistakes of the past. On this basis next time it will be back to doing not too much.

    History will show that today we made different old mistakes.

    The big mistake is allowing credit bubbles to grow for political expediency. Brown is a pathetic liar like most politicians.

    See Von Mises if you want to fully understand where this is all going.

    The job losses have only just begun. This will soon be the only important determinent in most peoples lives. Cheap mortgages versus ripping off pensioners income will become less central as things get worse. Many savers will simply have to use some or all of their savings to maintain their standard of living. Society always repatriates the wealth of savers to some extent in a debt crisis.

    Lose Job lose all. Thats where the agony is. It always was, we just forgot.

  • Comment number 34.

    What manufacturing needs in this country is a huge mult-billion pound injection of targetted cash. We should be looking to create brand new businesses fit for 2010 t replace older uncompetitive ones and we should be laying the foundations for companies to develop the latest hi technology products that will have global appeal. Forget the X-Factor and Pop ido, we need the equivalent show for new British industrialists and inventors and entrepreneurs with millions of pounds of 'prize money' to help kick start these new businesses. It would help too if we developed these businesses to be successful on a purely domestic level with a 60 million potential customer base. Any export success would be a bonus not an essential part of the equation.

    Time also to leave the EU, the billions spent subsidising our competitors in Eastern Europe and putting British workers out of jobs would be better spent doing what i have outlined above.

  • Comment number 35.

    There is a fundemental flaw in the approach of QE. This is the assumption that the extra money will get into circulation and not be hoarded by the Banks in order to repair the holes that are appearing through the bad debts of consumers and businesses as they fail.

    Perhaps an income tax free month in March will assist in repairing Consumers balance sheets, give a much needed boost to the cashflows of SME and cost about the same. This bypasses the Banks entirely, would reduce consumer debt levels, would encourage those with no debt to spend, since saving rates are uncompetitive, cheer everybody up in time for Spring and promise to do the same in October 2009

    If the Government is going to use the tax to encourage lending to us, why not just give it in the first place to the wealth generating areas of the economy.

  • Comment number 36.

    The banks were recapitalised and the cost to them is 12%. Until that chnges there wil be very little freeing up of money to anybody as banks get rid of that debt and can make their own decisions. I would be very distressed if the banks did ever get nationalised as this government have no idea how to run anyhing, they are THE KNOW NOTHING PARTY, who have presided over the boom, ignored economists predictions, and relied on other individuals who have no indepth economic, industrial, or commercial nouse. They have had an easy ride so far and the BBC do not help the public who pay for them by presenting them in such a facourable light.
    No I am not interested in watching you on whatever it is, the Panarama programme was unenlightening, it was just about you and you are not the news, you are meant to communicate it to us.Do your job and let us have some unbiased reporting.

  • Comment number 37.


    You can see it now Gordon Brown on Prayer mat facing WEST,
    "America could not give a damn about what is happening here"
    Better get used to the Fact, Britain IS on its own.
    Its no longer the Yanks are coming, to save the day, its all about charity beins at home,,
    The Vicar says, Gord help us,-- my boy,,
    we need a miracle, he 's thrown the money lenders to the dogs, and are out of the Temple of the City, --- begging for more and a lisence to print money means only one thing,
    back to 1945, and a bankrupt Britain, but this time there will be no Marshall Plan, OR nay bailout.
    Only a p45.

  • Comment number 38.


    I seem to recall that many of your blogs had hints at bad times for maybe you were just caught up in the moment. If you listened then you allowed the complacency of those businesses to allow them to reduce their sales and profitability.

    You seem to have a strong line on the Treasury but are sworn to secrecy, not really a journalist then. Are you sure they're not just having a blue sky session and seeing what everyone else can come up before they decide upon a policy change because they are clueless?

    I caught you on both Mayo's program and the later sports programme discussing football debt and were shown to be absolutely out of your depth although you stuck to your academic line.

    Can you find out if this new business scheme will be administered by the banks or some other organisation, I wouldn't want more money thrown after bad...and another option open to the unscrupulous to rebalance their books.

  • Comment number 39.

    15, I agree – I aint deluded but that shower are finished!

  • Comment number 40.

    # 5 spur22

    Yep, I'm one of those posters that has been consistently in the Eeyore category.

    Not because I want to talk anything down, but because so many apolitical, objective commentators (those with credible track records in analysing and forecasting) have been saying for so long that this crisis has all the hallmarks of being the worst in living memory. But not if you listen to the faux wisdom of the likes of Brown, Darling, Cameron, Osborne et al.

    No amount of guff uttered by our political elite thus far has convinced me that we're facing some sort of mild, economic hiccup, the end of which we'll see later this year - according to the risible assumptions and forecasts being made by our increasingly impotent, incompetent and pathetic-looking government.

    As I've said before on this blog, the UK badly needs a substantial politician to emerge from the shadows with the ideas, gravitas, leadership skills, tenacity and administrative competence to lead us out of this mess. Not one of our politicians currently in the public eye comes to mind, apart perhaps from Vince Cable.

    Here's a sound analysis of just how bad things are looking:

  • Comment number 41.

    All the politicians are floundering and competing to be good Keynsians with half baked ideas to get us out of this mess. Up to now they have managed to stave off a complete collapse of the banking sector using public funds but we are not finished yet. This crisis has a long way to go.

    What RP keeps telling us is that despite very low interest rates that businesses and individuals are finding it very difficult to borrow. The debt bubble has well and truly burst. Asset values are falling and still have further to fall. They were dependent on cheap overseas credit which has dried up.

    We have yet to see the knock on effect of higher unemployment on the economy in general ie much lower spending and are only just beginning to see unemployment rise strongly as the economy contracts.

    As I have said before we will be lucky to come through this without blood on the streets. It would be nice to see a cooperative spirit amongst our leaders to do what they collectively think is best rather than play party politics. In '29 government made a crisis into a catastrophe. We dont want to repeat that.

    Thank you Robert. I care almost nothing about your politics. I am just glad you seem to understand what is happening. Keep keeping us informed!

  • Comment number 42.

    At the risk of nit-picking: there's nationalisation with a small n and with a big N. Given we ( the taxpayers, the State) have saved the banks from collapse they have been nationalised. However, they have not been Nationalised: they are still operating for the good of shareholders (who would have lost most of their investment without the State's intervention) rather than the general good. Time for G Brown to stop pussy footing and start talking about the big N.
    In the short term we need to try and save as many jobs as possible: in the longer term we need to direct investment into energy production of all kinds, pharmaceuticals, food production, social housing etc. Producing consumer goods to feed consumption via a buoyant retail sector is unsustainable.

    A Tory government would take us straight back to laissez faire ( leopards do not change their spots) and look where that has got us; no manufacturing, bust banks, no housing market, no coal, pretty much everything sold off to overseas companies beholden to overseas shareholders

  • Comment number 43.

    3.17pm - 2.32pm comments not yet moderated - BBC cut backs or an employment opportunity to celebrate??

  • Comment number 44.

    is there a timsbomb ticking under the white collar?

  • Comment number 45.

    "That said, the pre-Christmas hysteria about the meltdown of retailing was overstated (though the shopkeepers have themselves to blame for this hysteria, with their characteristically neurotic seasonal gloom about their prospects)."

    Ermmm...I can't decide what word I'm looking for. Irony? Hypocrisy?

    In article which includes the phrases "very painful", "truly shocking", "precipitator of our misery", "lethally bad", "chronic" and "more draconian" I find it somewhat amusing that you are able to write such things with a straight face.

    If the shops say such things, how do we plebians hear of it? Through the media. Who "spice it up" with the above words to try to get an awar...errr the message across.

    I know the Beeb website has a red band along the top, but that's no reason to write like the NotW. Let's stick to facts, and leave the flowery writing to the book writers 'k?

    Numbers wise, a good, useful piece, but the doom and gloom filler can go.

  • Comment number 46.

    I've never heard of Sportacus either!

    What is GB doing in Swindon when even David Cameron is visiting Nissan following that terrible announcement yesterday? Ridiculous!

  • Comment number 47.

    The pre-Christmas bashing of retail was NOT over-hyped. They made it without enough reserves to see them through the desert of the post-sales period, and the road from here to the summer will be littered with dead and dying retailers. We talk long-term here, and although it's a truism that we're all pushing up the daisies in the end, for some it comes sooner rather than later. Go look at the figures for the last week of the sales, it's gone horribly dead.
    I thank the Lord I still have a pension from a certain well-known choccie manufacturer - there's going to be a deal of that noshed over the next few months.

  • Comment number 48.

    Well Robert ....

    Armageddeon is coming much faster than i thought. only joking things are not that bad.

    But figures coming out are more worse at this stage. 524,000 jobs loss in the usa in dec, which will be revised up to around 650,000. so jan 2009 1,000,000 job losses is well on the cards. so since your blog a fairer society. Jobloss outlook for the usa is 80 million now. thats 16 million per 60 million people. a 5th of the usa population = population of uk. as the uk is is to be hit nearly twice as bad as the usa then 30 million joblosses is about correct.

    OH DEAR better tell A.D. to start printing that money and fast. this will spread the lack of wealth. and hopefully keep 15 million in low paid jobs.

    The 775 billion for the usa stimulus package
    will be of little help. dont get me wrong it will get a couple of million into jobs. but how long they last remains to be seen.

    Election would be good so we can get a leader who knows whats he is doing,


  • Comment number 49.


    BasaltRocky, I sorry, but I think you have mis-read the currency issue.

    The UK will never be a labour intensive low tech underpants producing manufacturing economy again.

    However, we can remain a high-value add high technology economy - i.e. like Germany, France, etc.

    The issue is that just about every British high-value add manufacturing company or technology company is part of the global supply chain - whereby they all have a significant portion of their supply or own manufacturing base in foriegn climes.

    The devaluation of sterling has resulted in the real costs to our manufacturing industry increasing by 25-30% in just a matter of a few weeks - far too quickly for most to react to. Combine this with the volume downturn we are seeing and British industry is in a really dire straights.

    The last thing most of British industry and technology companies is for Sterling to be at the current levels, let alone continue to decline.

  • Comment number 50.

    I am in China and talking to long standing business relationships, people who are straight with me and I with them (not always the case here sadly)

    What is very strange is the acceptance that the Chinese Government has a strategy of increasing their service industries as a percentage of GDP.

    When I tell people what a mess that has brought the UK into they are amazed at first but then comprehending.

    Like the rest of the world not all factories in China are in a mess and the ones I have visited seem reasonably robust from the figures I have seen. Well run and financed companies making products that people want win in these recessionary situations.

    BTW over dinner one night I asked what people thought BBC meant. One though the Brown etc etc and he was serious. Great laughs all the way round at first but then we comprehended. It really is not funny.

  • Comment number 51.

    The 7% figure is Nov '08 v Nov '07.

    If that were replicated every month for 12 months it would be a 7% annual fall. If the rest of the economy were flat, then the annual rate would indeed be c.1.6% and Darling would be a genius. (But it won't be flat and Darling isn't a genius).

  • Comment number 52.

    Although i have been critical of the retail sales reporting as being too gloomy these figures are truely shocking indeed.

    If the country is going rapidly into further debt then lets hope some of this is to protect and enhance our manufacturing base.

    Would be a bit of a problem paying of the national debt if no jobs left in industry!

    I don't expect the tories to go the whole way and admit arthur scargill was right but what we have remaining is as a result of pure capitalism of short term profitabilty rather than a structured government policy on the wider economic and social aspects of declining industry and the long term issues of full employment for "our childer and their childrens children!"

  • Comment number 53.

    "the chronic shortage of credit in the economy - which is the precipitator of our misery"

    Er, are you sure about that? I thought it was the easy availability of credit and the consequent excessive borrowing that was the precipitator of our misery?

    Maybe I'm missing something, but the shortage of credit is surely the symptom, not the cause? And could the shortage of credit not even be the cure as well? If people and companies get back to the idea that they will have to live within their means rather than base their entire existence on easy credit, isn't that a good thing in the long term?

    BTW, am I the only person who read the title of this blog and thought that things had got so bad that the Tory party had been nationalised?

  • Comment number 54.

    #49 - Call me Tom

    As someone who works in international Logistics and Supply Chain Infrastructure, I think your comments are well thought out but misplaced.

    The current crisis will mean that within 5 years we will not be able to afford cheap underwear/skirts/trousers from the Far East, as our under-performing economy will be crippled, Sterling crashed, and the cheap at current exchange rate items now produced there will be more expensive than home manufactured items. Yes, it really is going to get that terribly bad !

    But if we do so now, our manufacturing industry will be oh, so much stronger come five years time.

    The economies (including the UK) who did best out of the 1930's slump were those that depreciated early. Learn from history.

    And UK industry input supply costs are predominantly priced in EUR's and USD's, and NOT in Yuan or Vietnamese Dongs.

  • Comment number 55.

    #27 Mr Pirate - wrote comment 30 without having seen your 27 - did they pay in cash?

    Now the interesting bit - are you keeping it in dollars or are you going to move it into another currency - if so - which one?

  • Comment number 56.

    I answered that one a while back. It's to do with credibility.
    Imagine you're a banker, faced with a loan application from Arfur Daley's Motors Unlimited. You say yes, and it goes pear-shaped, so you ask the boss to call in the HMG guarantee. I wonder whose name's going to be on the next P45 list?
    It's nothing to do with HMG, it's everything to do with bankers keeping their jobs. This is now a market where there are old bankers, and bold bankers, but no old, bold bankers.
    HMG can say what it likes, it now means about as much as whistling down the wind. The bankers have ignored them twice, whilst pocketing huge amounts of our dosh. This is stupidity incarnate.

  • Comment number 57.

    It amazes me that there are still opportunists gloating about the possibility of buying a cheap repossession house, presumably to rent out, as they have a large amount of cash to play with.

    It is easy to be too negative about this crisis, but then it is also easy to miss how significant and dangerous some developments may be.

    For example, the way the Bank Shareholders have been treated.

    This tells any investor, domestic or foreign that this country is a more dangerous place to invest money than certain others.

    Handing high street banks over to a foreign Bank is also not a good thing.

    Taking Banks into the Public Sector is not a good thing. Remember that they pay Tax on profits, any profits made whilst publicly owned are only going to contribute a little more to the Treasury than ordinary Tax revenue.

    Once in Public ownership, it will be very hard to pass them back into private ownership. Eventually what is left of the Banks will probably be given away to a foreign institution for a song.

    Of course any future profits from foreign owned Banks will flow abroad and will not benefit the wider British economy.

    So Britain is seen as a riskier investment proposition and as a faltering economy.

  • Comment number 58.

    Thinking of Nationalization , I am surprised that the Housebuilders haven't been gobbled up by the Treasury.

    Perhaps they are just biding their time before grabbing all those thousands of acres of prime building land..........

    But if unemployment keeps rising at some point rents will fall, and property could well become a very poor investment indeed.

    Part of this crisis undoubtedly has been talked up by the Media, but like an Avalanche, once it has been started, you just have to wait to see where it all ends up.

    It could well get far worse than many of these commentators actually imagine.

    I'm sure many posters get a thrill out of doom and gloom mongering, but the continual slide in consumer spending without action to boost manufacturing or other exports, will create great hardship amongst everyone within this country.

    We have seen the Pound fall to almost one Euro. This could easily get worse, if Britain cannot export SOMETHING.

    The damage to Britains financial services income needs to be made up from somewhere else, and until it is things will get worse.

  • Comment number 59.

    A lot of you talk about protecting the UK manufacturing base.

    What does the UK produce these days that are needed the world over? Electronics? Microprocessors? HDDs? etc.? Mass production cars?

    I am finding it hard to think of an item - a British import of significance. Dyson comes to mind, but not really a global scale success story!

  • Comment number 60.

    Hey Bob,

    I hear there's a new job being advertised at the FSA for a new Head of Financial Stability......I bet that little girl from Lazytown, Stephanie, could make a good stab at it!

    She shurly couldn't do as bad a job as the previous incumbent(s)!

  • Comment number 61.


    " - increasingly impotent, incompetent and pathetic-looking government."

    This would be true if the objectives of that 'government' were to lessen the impact of the 'economic crisis'.

    Wakey wakey - the objectives of the 'GoDvernment' is the financial 'crisis' - so far their doing a very good job.

    Please think about it for yourself, get away from the media doctrine and political pretense and look for the real objectives in all of this, who is benefitting and how?

    - why else would anyone implement the policies of creating more national debt to pay off bankers debt, 0% interest rates and 'quantative easing', come on this stuff is getting comical, break out of the trance.

    Just what will the Mass' have to swallow next - anything 'you' damn well tell them and 'you' know it.

  • Comment number 62.

    So large businesses -

    With far far too much debt ...

    or with uncompetitve labour costs compared with the Far East ...

    that have been afloat recently simply due to Browns Bubble are having to face a drop in volumes,

    ... and manufacturing which is mainly orientated towards domestic customers in Browns bubble sectors

    are in trouble now that Brown cannot blow any more bubbles..

    Never read Alice in Wonderland then. The Caterpillar that eat from one side of the mushroom and grew - and shrunk and shrunk when the other side was eaten.

    This isnt news, it is just confirmation of what was in process in the last quarter.

  • Comment number 63.

    This "bad bank" idea baffles me? Why should the taxpayer BUY "assets" that are WORTHLESS? Surely it would make more sense for the banks to donate them, just to get them off the books before they depreciate further?

    Give them all to Northern Rock to join it's own worthless, depreciating assets. At least the job of managing these cases will keep all the remaining staff in jobs (for a while).

  • Comment number 64.

    An obvious move at the start of the crisis was to ensure that money went to viable companies to give them time to restructure and prepare for the downturn

    Above all these should have been top of the list.

    Unbelievably months later we have a government that still hasn't grasped this.

    Either that or government spending is in such a mess that refinancing this is top of their agenda.

    How long before the implosion?

  • Comment number 65.


    Britain could easily be in the position to manufacture its low tech Underpants, or even High tech parking sensor pants, within the next few years.

    The reason, a collapse in Sterling against most other currencies, coupled with a collapse in living standards.

    This future is looking more likely eevery day.

    The only way to avoid a great collapse in living standards is for Britain to find goods and services it can provide to the rest of the world.

    If we cannot convince the rest of the world to buy British goods and services, then the Price of those goods and services will have to fall, one way or another, until the rest of the world is prepared to buy.

    Until then our living standards and exchange rate will be on a downward path.

    Britain does not have the Unearned oversea income of Oil, Investments, Protectorates or colonies to live off anymore, we have to export.

  • Comment number 66.

    The nationalisation of credit by the tories is the only answer as you sat, unfortunately the wait and see policies of a Labour government are making things worse.

  • Comment number 67.

    The aim seems to make savers spend. I have saved to spend my interest. Lack of interest means I spend my savings. When they are finished I can claim government benefits? Who does this help?

    Couldn't the Government make large subsidies for example to the fitting of solar panels? I would then be ready to spend my savings on a productive investment. The country would be less dependent on foreign sources of energy. Workers would be employed to manufacture and fit the panels. I would save future costs and be less dependent on savings.

  • Comment number 68.

    Robert’s thoughts pose some difficult questions. Firstly how can we tell the difference between a viable and non viable company. Quite clearly company account auditing appears to be just a rubber stamping exercise and the reality is that those that appear in a poor position might actually be more viable than those that appear to be doing well. How can we tell what is in tier 3 capital for the banks, do firms really expect to get back all that Vat that they claim on their accounts, did company assets really devalue at a slower rate in 2008 than other years. Share holders along with directors seem to have done a pretty bad job of keeping companies on the straight and narrow.

    Letting companies go bankrupt does not necessarily mean job losses apart from at the top. Wedgewood would appear to be a good example of this. We do want to support viable companies but we also want to wait until it becomes a bit clearer who the actual viable companies are. Let me blunt I don’t want to be lending to companies which I know are going to go broke with perhaps the one exception of financial institutions which are critical to the economy.

    Perhaps a more difficult question is how do we know that banks are not lending to viable companies? We have hearsay from some directors who may or may not be economical with the truth about their companies. How do we even know what a sustainable level of company credit is and let us face it those companies that are doing well at the moment are paying off their debt and those looking for credit may be up to their gills in debt already. In that light how are you going to view someone asking for credit without in depth knowledge of their financial position. In depth knowledge by the banks of anyone seems to have been in short supply, something which perhaps will change during this downturn.

    This is all just typical of politicians panicking and what we need is well timed and targeted intervention. Companies which are serious about expanding and doing well may well be looking to raise bonds rather than borrowing from banks. Here the government could help to reduce costs by buying up a small percentage of these commercial bonds.

    Timing is critical and the bottom is most likely to coincide with house price declines which seem set to continue tanking until early 2010. Late this year will be when we know which companies have been all smoke and mirrors and which are viable concerns. That’s when companies will need the credit, to pick up the pieces of their fallen competitors.

    When investors have confidence in company accounts things will start to turn, bailing out companies too early delays the point in time when confidence is returned. It’s a recession and they happen and trying to force those who don’t want to borrow to take on debt will not work. What is most worrying at the moment is the number of companies cutting back on internal investment and this is where government could help by sharing the cost. It is not credit that limits internal investment, although it can play a part in highly leveraged companies but margins. These margins in a lot of cases depend to some extent on cheap importing from Europe(Sterling value). The government by increasing credit will have very little affect on margins where as government grants for internal investment would place UK companies in a good position in any recovery.

    Mean time let us watch the politicians all run round like headless chickens trying to come up with the worst bailout plan. Whether its printing money, trashing sterling even more, throwing money down the drain, nationalisation of everything there appears to be less and less choice between the political parties. How long will it be before a bank nationalisation triggers a credit default swap event which sets off a further deterioration in the global market (total collapse), or Barclays/HSBC move their headquarters to Germany or the USA.

  • Comment number 69.

    #54 BasaltRocky.

    Think we may be in violent agreement. I was specifically talking about the Euro and Dollar.

    My huge concern is two fold:

    a) There is no point in people (not yourself) stating that a low sterling is good for British industry. The issue is that for most of British industry, we export our manufacturing. This doesn't mean we are not creating wealth for the country - the highly paid design and knowledge workers are employed in the UK plus profits and foriegn currency is brought into the country.

    The companies who do actually assemble or manufacture in the UK, invaribly have the majority of their supply-chain in Euro's or Dollar (nobody buys from China in Yuan, however, your are correct in that the Yuan is pegged to the dollar and valued too low).

    If our currency continues to devalue,
    the future of high technology and high-value add industry is very bleak - infact in my opinion unviable. So we may have to revert back to underpants manufacturing as you said.

    Thing is, I for one do not want the UK to go back to a repetitive low-value manufacturing base. I think the future IS high-tech/high value-add.

    b) As the majority of goods we want (from TVs, digital camera's, cars, etc to raw material for factories) are imported and we've just seen the pound devalue by 25%+ to every major currency. Then how can we not avoid major 20%+ inflation?

    To me the if the government is indeed encoraging the devaluation of the pound, it shows how completely out of touch they are with the reality of British industry.

  • Comment number 70.

    On balance Osbornes suggestions make sense. They may help a bit. Well, I suppose they can't really have been his 'cos he's as clueless as Labour - but well done whoever.

    I'm with 27 in that it would be nice to see cross party co-operation, pooling of ideas etc to arrive at a best concensus view of what to do. Of course it can't happen as Brown wishes to be seen as the saviour to give him a chance at the election.

    Our absolute tragedy is that he is absolutely incompetent and will ruin us and our children in his vain attempts to save his skin.

  • Comment number 71.

    This may be a very painful recession but forgive me Robert but you seem to be having the time of your life.

  • Comment number 72.

    "Even so, there's a role for government, to prevent the chronic shortage of credit in the economy - which is the precipitator of our misery - from wreaking devastating harm on viable firms."

    Well said Robert, the Government is indeed 'the precipitator of our misery'!

  • Comment number 73.

    That's the way to do it...if you're skint print some more money...easy. No problem.

    You mark my words the direction we are heading will end up with:

    * 3 million + out of work

    * House repossessions at an unsustainable rate

    * More pensioners on the breadline because of no return on their savings

    * Many more high street names going down the tubes

    * International British institutions disappearing without trace

    * Insufficient money to sustain public expenditure eg NHS

    * The £ ending up as a banana republic currency

    That's enough to be going on with.

  • Comment number 74.

    Post 59. I think you will find that Mr Dyson moved his manufacturing to South East Asia a few years ago.

  • Comment number 75.

    Many very good responses here, better than the original article in fact.

    The big question at the moment is whether the government can possibly raise the sums that it expects to borrow in the coming year. Alistair Darling puts this at GBP 118bn, but this is a net figure - add in likely redemptions and the sum actually needing to be raised is probably at least GBP 150bn. His sums assume that the recession is moderate, and recovery begins in mid-year - both assumptions are surely becoming more dubious by the day. The sum needing to be raised could well increase still further - GBP 180bn anyone?

    Given that Germany (a stronger economy with a stronger currency) recently had to abort a comparatively small (E 10bn) bond offering, what are the chances of the UK raising the kind of sums we are likely to require then? The prospect of quantitative easing - a.k.a. printing money - would scare foreign investors away.

    Anyone holding gilts should sell while they have the chance.

    Finally, RP's contention that Tory policies amount to nationalisation is nonsense, as others have rightly pointed out.

  • Comment number 76.

    56 rahere


    The banks mission is to stay in business and make profit and to stay private not public. Who in their right mind would want HMG as a ring master. The surprise is HMG believing that they could indirectly control the banks by very broad memo. At the end of the day a contract is between two parties - the individual borrower and the bank, not HMG. Those two parties share the risk not HMG, no wonder HMG is ignored by both. HMG remind me of Neville Chamberlin coming down the steps waving the memorandum of understanding before WW2 and saying Its all sorted chaps. If HMG want to be a player they have to move to a different game, different mechanism. Problem is they believe they have more influence than they actually have. Lamont found that out with ERM. Lesson never learnt.

  • Comment number 77.

    Well in short the Government under Prudence has done a superb job of putting any other political party between a rock and hard place. Pru can't admit to the principle of the fact that he in effect nationalised the banks or rather he has allowed the Banks to colonise Britain, its really the obverse side of the coin. Ergo the conservatives have no alternative to the policy. As one contributer pointed out Labour did steal Conservative policies in order to get elected. It will be with some glee that traditional socialists will point to the fact that Conservatives will now have to be quasi socialists which will be their ultimate victory. I have asbsolutely no doubt that we are heading for an early election and probably a hung parliament.

  • Comment number 78.

    I totally agree with #3. How on earth can the Government spin the myth that the Banks aren't playing ball by dropping all their credit rates directionally proportionally to the official interest rate when the government won't alter or consider altering the rate at which it LENT (not gave, not handed over and said "sorry to hear the bad news mate, this should sort you out, no need to pay us back) to the banks.

    The banks were recapitalised and the cost to them is 12%. They need to pay back what they borrowed plus the interest. They also need to be making profits. Does the government what to put them into a quandary where they are always "in debt" to to government and so Crash Gordon can always call the tune?

    I think that Gordon is too proud to admit when the Conservatives, Lib Dems or anyone else but Labour have good ideas and he never wants to admit he is wrong. Don't let your pride be your downfall Gordon - and don't let it be the cause of our downfall as well.

  • Comment number 79.

    #55 grimupnorth

    yes the transaction is completed and it was cash on the barrel-head, literally

    what form to hold one's wealth in......... it is a worry, even for pirates, and I'm not keen to hold it all in US$ or euros or any currency I can think of; and currency speculation is for experts, as they say

    given the overall state of things I think the best investment my be PADDLES because we are all definitely up s*** creek without one; meaning a potential market for nearly 6 billion paddles; may also invest in some canoes to go with the paddles, and it appeals to my Canadian heritage

    yes it is bad, though some fellow bloggers are getting a bit overwhelmed by doom methinks: #48 lionsomebody predicts more job losses in the UK (30m) then there are jobs!

    I might seize a ship-load of boxer shorts as well though, given comments from #54 basaltrocky that the UK population will have run out of clothing within 5 years

    a nudist colony on a national scale might be good for tourism, though I hope you get some warmer weather

    Islay whisky also seems a good long-term investment as we'll all be needing the occasional glass of grog I think! and I love that film about the stolen shipload of whisky but then I would wouldn't I

  • Comment number 80.

    what's the point of the BoE reducing interest rates, when nobody can borrow any money because the high street banks aren't lending ?

  • Comment number 81.

    I for one make no apology for being one of the siren voices that have been saying that this SLUMP is going to be far deeper and longer than our leaders and some other posters have allowed themselves to believe.

    A poster above identified that we don't need more credit for business and I agree with them. We do need investment and that can only be done by a central authority.

    To my mind we need to identify the strategic elements of our economy that cannot be allowed to fail. Those businesses then need to be brought into British ownership (we cannot waste our scarce resources ploughing money into foreign owned firms only for the parent to then pull the plug). All investment has to include a requirement for increasing R&D spend.

    How we can bring this about I really don't know. It would take a very strong leadership from Whitehall and I just don't see that happening.

    The snowball is running down the hill at a far faster pace than some of you might think.

  • Comment number 82.

    Is Robert's introduction to Sportacus the start of a big news story ? It's hard to deny that Cbeebies' use of Lazytown programmes has rocketed skywards since the Icelandic economy fell apart. What's the reason behind the BBC licence-payer being forced to subsidise Iceland ? Was all that TV licence money kept in an Icesave account ?

    Let's hope Robert's investigative nous into his employer's affairs won't be bound this time round as it was in the past by Lord Black...

  • Comment number 83.

    Ah, now you see Shareholders (unless they are Pension Funds or Investment Houses etc) are always going to be amateurs.
    They are just ordinary people.

    They have to trust Regulators to do their jobs.

    They have to trust Accountants and Auditors to do their Jobs.

    There is no point reading False Accounts.

  • Comment number 84.

    We should not be surprised at the sharpness of the slowdown. A feature of modern business is the access to information and the complexity of supply chains. Reduced activity in automotive is a classic- it happens everywhere and because everything is just in time- T1 through to T3 suppliers have their orders cut completely- there is no such thing as gradual in this recession. And all the automotive boys know what they are each doing and they are good lemmings just like the rest of us. And the key is credit- the confidence to take orders knowing that you can get your own supplies, finance the necessary working capital and get paid by your customer. Government will have to intervene a bit but let us not forget that some manufacturing is doing well and the strategy has got to be to develop the manufacturers of tomorrow- those with green technology or those that help us secure utility supplies including water. FMCGs are not the way ahead but making things that sustain our lives and the planet must be the way ahead. Supporting automotive that is green is necessary but old fashioned gas guzzlers need to go away. I think we also need to start thinking about how we can use all this coal we have underground and how about building ships again? Even ones that use solar power or plain sails!!

  • Comment number 85.

    Thatherism and Blair/Brownism have both devastated British manufacturing.

    This disaster has been made possible by the success of North Sea oil/gas plus the success of financial services. With the taxes raised from these sectors government had been able to ignore manufacturing industry.

    It is now obvious that our future prosperity will depend upon the success of manufacturing.

    But here is a problem, our tax system has evolved together with the rise of manufacturing during the 18th and 19th Centuries. Too much of our tax system is designed to take from manufacturing and too little has evolved to adequately tax the profits made in a very different world.

    For example business rates are charged per square foot of floor area. This puts manufacturing at a great disadvantage due to is need for floor space. Manufactures are forced to pay high rates bills even though their factories are, at best, only just profitable.

  • Comment number 86.

    It was interesting to hear mandelson once again spinning like mad telling Wato that Osborne was agreeing with the government policy in the PBR. He either doesn't understand the Tory policy or what was in the PBR.

    On another point, a major part of British manufacturing is in aerospace. I have heard absolutely nothing on this blog about the industry, China has stopped all domestic airlines importing aircraft and other airlines are cutting back. A large number of leased aircraft are financed by British banks so keep an eye on the industry.
    The biggest worry about its future prospects is that Duff Gordon visited Derby a couple of days ago and posed for some pre-election photos.

  • Comment number 87.

    16 vjangelo
    I think it is pathetic this bunch of loser-mentality Tory trogs berating Robert for being pro-Labour.
    Robert is his own man (and a gloomy so-and -so he is too!)...a government mouthpiece would be much much less critical.
    What is apparent is how damaging and treacherous to Britain this Tory-we-are-all-going-down -down-the plughole mania is.
    I know that enquiries are coming in thick and fast in the high-end land-development market.
    The pound has risen 10p v the Euro and the dollar .It is at a very competitive level which will help exports.
    Private schools are not closing down.
    Golf clubs are suffering....the whiners are too busy blooging all day to get out in the fresh air.
    The shops are packed.
    The airports are mobbed.
    The National Savings Bank has got cash overflowing out of its doors with people queing up to deposit tens of billions.
    And millions have got extra to spend now their trackers are coming down.
    Yes, savers are being hit hard.
    So do not think anyone is conned by all of this bleating....Britain is on the mend again.

  • Comment number 88.


    If the High Tech industries cannot export, they are going to be in trouble anyway.

    The Consumer market for all Products is set to shrink for the forseeable future (except food).

    This is due for the most part on Wage rises being lower than the actual rise in the Cost of living.

    Ordinary people have less and less money to spend on luxury goods, High tech or otherwise.

    This trend shows no sign of changing and with growing unemployment every sign of getting worse.

    Many products we all consider everyday may well become luxuries or treats in future.

  • Comment number 89.

    Looks like Iceland only bought 51 stores when last year they offered to buy the whole of Woolworths portfolio

    I wonder what that makes the ex-management of Woolworths look like for rejecting the bid. I understand they might not have known about "the credit crunch" and it's bite, but all those 30,000 jobs might have simply transferred rather than disappearing.

  • Comment number 90.

    #70 crosserandcrosser

    glad you agree with me that cross-party cooperation would be worth trying ...... in theory at least; I'm sure no-one wants to hear even one more parliamentary question time where these political psychopaths preen and posture and point-score instead of behaving like grown-ups; our political parties and systems seem unable to come to terms with big issues; look at how they duck and dodge on the climate-change question, peak oil, the tragedy of Palestine etc

    interestingly Canada hasn't even had a sitting parliament during most of the crisis because the newly-elected minority Tories refused to recall it when they realised that they were going to lose a vote of no confidence on day 1; draw your own conclusions about the relevance of our elected representatives!

  • Comment number 91.

    Shouldn't there be a total and radical replacement of entire corporate and government systems at this stage, or is this the wrong time to replace and improve things.

  • Comment number 92.


    We already have an Xfactor programme for business, it is called Dragons Den, which is worrying if those are thje best ideas we can come up with.

    Better still why not recruit our top entrepreneurs, serious players, Alan Sugar, Richard Branson, etc. split them into teams make billions available and set them to start multinational manufacturing businesses, which must all operate within the UK. Let the TV channels follow their progress.

    They would probably all lose the lot but at least it would be more entertaining watching our money go down the drain than it is with Flash losing it.

  • Comment number 93.

    69 call me tom

    The problem is if you do not have a technology edge all you have is a labour market, and labour however low it is driven here, is expensive against other locations as others have noted.

    The only resistance is transportation cost and that is only a differential, ie ship materials or ship value added materials as goods, you still have to ship something.

    There is still the situation in India that people go wading in rivers infested by freshwater crocs and regularly get maimed and killed fishing with nets for small freshwater shrimps and fish fry. They only do this so they can eat.

    What level do you think labour costs have to drop in the UK to become competitive with that scenario. China is causing problem with some Indian craft based sectors that is the extent of the problem. How long before labour parity is reached, Hmm, a lifetime.

    The problem is private sector technology has been underfunded, academic reseach has slid due to government funding policy, public reseach bodies have been slashed. You are left with pockets of technology, and as anybody who takes a look at innovation hotspots you need a community eg silicon valley, a interactive number of technologists, to get things working well.

    This goes back to Thatcher being dismissive of manufacturing and not understanding technology, followed on by Lawson being keen on the service sector being developed, continued with Browns glorification of the financial sector. It cannot be undone overnight even if there is the will which is questionable.

    The only thing you can make here is something which cannot, for whatever reason, be made in the Far East. And the rise of a technical edge is the Far East is apparent.

    We all can form a circle a dance around servicing one another. With some financial sector. and limited smart niche manufacture.

    No Brown Blair and Bush have done a far better job than Osama could have ever dreamed of. Very effective distraction tactics. The Wests vanity and superiority complex is part of the problem. Never underestimate. Julius Caeser - It is not the groomed well dress men I fear but the hungry and ragged, - or very similar - I would need to look it up.

    Those who go on about businesses in trouble miss the point - the transition is not completed. The exceptional thing is 3/4 of Nissan is still here not that 1/4 is going.

    If you want to know what is likely in the near term you have to look to see who is holding their own.

    Anyway I'm off to see my mate of many years at the curry house. He likes it here, and is successful even now and has no intention of going back.

  • Comment number 94.

    90 somali pirate

    shouldnt that be crosser n crosser party co operation.

  • Comment number 95.

    #69 Tom

    Oh how history repeats itself.

    100 Years ago, the British cotton mills supplied the world, but within 20 years many were bankrupt and gone, caused by foreign cheaper competition that caught up.

    Today, out universities are full of bright, pleasant Chinese students (effectively funding our further education system). Many are at sites near the old mills.

    Within 20 years, especially with all the R&D investment, they will also have overtaken our high-tech.

    100 years ago our forefathers laughed, and considered it ludicrous, that foreigners could compete with British industry.

    How history repeats itself !!

  • Comment number 96.


    3 million + unemployed.

    People really need to wake up here. since the new year the uk are now losing 6,000 jobs a day. so for jan you can expect 120,000 jobs to go atleast,And as the figure will rise on a monthly basis and at a rate never seen before. by may 600,000 jobs will go. not for the first 5 months but for just the month of may only.

    where in a meltdown

  • Comment number 97.

    Although I agree it really makes me squirm to hear so many here saying how important manufacturing is (now)..

    For as far back as I can remember (and I've been heavily involved with mfr for many years and by no means just motorsport) the industry (from small to large) has been sidelined, derided, scoffed at, looked-down on, broken up, sold off, privatised, plc'd, bought up, liquidated, sued, foreclosed-on, and generally treated to every other negative verb/action I can think of. And doing it has never been much fun or particularly er, lucrative, esp for men who work on machines hour after hour.

    Ho hum. How the worm has turned now that the heady days of making money in retail and service by doing as little as possible and creaming in 500% + margins are over!

    If it's really amateur night from here on in - and manufacturing is King now - the price goes up.


  • Comment number 98.

    Thank goodness there are some people prepared to think outside of the box. We cannot draw upon a historical experience that mirrors what has happened with the credit crunch. tinkering with the price of credit is pretty much pointless, when the real problem is the supply of credit and more pertinently where new credit is going to come from.

    One thing also to be considered is that the UK at a government level is excessively centralised. I very much doubt that a solution can be found where one size fits all. I have worked in Scotland, West Yorkshire and now in the South East. It is fair to say that the business cultures and the respective economies are quite different in these regions.

    Dictating an economic recovery from London will be inefficient and not target the important sectors of the respective regions. Will Brown's massive ego permit other peoples opinions, to influence Government thinking? Can he set aside his personal antipathy of clever thinkers like Frank Field?

  • Comment number 99.

    It may well be that economic growth and the definitions attached to it of recession etc is now an outdated concept. Asset values have not yet bottomed out and assets such as property are really forms of exchange. Does it matter what level they eventually reach? Financial markets have been concentrating on growth in Sales and or profits and we have all been following this mantra. Stability and cash generation for investment is not a bad idea and it is a revision of economic models considering these aspects that is required now. Throwing money around in a desparate attempt to get back on the the "growth train" is extremely short sighted. When are we going to have a real review of alternative options for the way forward?

  • Comment number 100.


    Replace one Committee of Ignorance with another committee of Ignorance ?

    Very difficult to rebuild things from the ground up.

    This is why Lenins dream of Communism failed.

    And why mixed Economies, where those who can , do, work.


    Of course Britain has an inbuilt superiority complex that stretches from the Playing fields of Eton down to the Benefit Culture council estates.

    We all feel we are entitled to have everything we see, and envy those who seem to have more.

    A good job, house, car , holidays.

    Something for nothing or the bare minimum of effort, seems to be a British maxim, too proud to work hard seems to be another.

    Unfortunately, dishonesty, especially in the Accounting profession seems to be rife.

    People believe they should be rich and lose their Morals in the pursuit of a fast buck.

    Those of us dumb enough to believe and trust the Regulators and accountants end up losing our savings.

    We are all fortunate to have lived in this Country, during the artificially high exchange rates, which have given us cheap holidays and cheaper imports.

    Now it looks like things are coming home to roost, and I don't think too much sympathy will be coming from the rest of the world.

    I'm not a Tory nor am I Labour, if I were to vote tomorrow I would either vote Liberal or in fact not bother.

    None of the Parties are grasping the Nettle.


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