Socialist Party documents

Perspectives for Britain and the world 2009

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Collapse of British manufacturing

We have chartered in our publications the over years the astonishing collapse of British manufacturing - once the 'workshop of the world' - and its reliance on finance capital, initiated by Thatcher and willingly continued by Blair and Brown.

The fantasy land which they inherited held that this was the lifeline for the long-term for the British people and the world.

This was a world in which manufacturing allegedly represented a dead end. The consequence of this is that, in this decisive field, Britain is now way behind China, Japan and Germany.

It is still the world's sixth largest manufacturing power, just ahead of France, but lagging even behind crisis-ridden Italy.

This is a product of the 'slow and inglorious decline' of Britain as a major economic power. This fact was illustrated by the recent efforts of Britain and China in space exploration. The latter recently became the third power in space after the US and Russia to land a probe on the Moon.

Britain followed shortly afterwards in November with its own efforts, this time with the launch of a teddy bear into space! Adding insult to injury, the teddy bear was probably made in China itself.

In the 1979-82 crisis, 16% of manufacturing industry in Britain was destroyed and declined even further during the regimes of Thatcher and Major, as well as those of Blair and Brown.

Consequently just fewer than three million Britons now rely on the "business of making things as their livelihood". [The Independent.] Manufacturing accounts for just 13% of Britain's GDP, about 150 billion but half of UK exports are from this sector.

Yet there was a further decline in manufacturing in 2008. The devaluation of the pound should theoretically make British exports cheaper but as we have seen there is a glut, especially in car production and manufacturing, throughout the capitalist world.

So despite the massive efforts of a highly-skilled workforce, with a dramatic increase on productivity, the sacrifices of British workers have been in vain as mass lay-offs loom.

Hundred of billions of pounds have been lavished on state aid for the banks while, as even the Independent has pointed out, a policy of 'benign neglect' has been adopted towards manufacturing industry.

However, there is now belated recognition of the historic catastrophe which faces a modern nation without a manufacturing base.

The historical dilemma now confronting this country and its people has been illuminated by the uprisings in Greece, which is what these events were.

Greece has faced colossal deindustrialisation, to the point now where there is virtually no industry in the country to speak of.

The sunny optimism which characterised Greek society as it developed on the tail of the 1950-75 world capitalist boom has evaporated as an impoverished nation, reliant on tourism, EU grants and agriculture, has collapsed into an economic and social slough of despond.

A massive number of educated unemployed youth co-exists alongside their impoverished brothers and sisters, the '700 generation' (650), the average monthly salaries earned by graduates in Greece.

But it is not just young people but 40 and 50 year olds who have to scrape a living on these poverty wages.

Greece's recent history has been explosive, of course with the memory of the civil war of the 1940s and its aftermath - including the military junta from 1967 to 1973 - still lodged in popular consciousness, including the new generation in revolt.

Similarly sharp social confrontations are inevitable on the basis of the further inexorable decline of Greece.

The same prospects loom for other countries of southern Europe, Spain, Portugal and Italy.

Britain's recent history has been different to these countries, of course. But the cushion that acted to ward off the most severe consequences of past capitalist crises has been jettisoned or has declined.

Britain is no longer shielded by a mighty empire, which acted as a source of raw materials and a market for its manufactured goods.

Manufacturing industry itself, under pressure in world markets from more efficient competitors - the US, Germany and, latterly, China - was further weakened by the conscious policy of Thatcher and her acolytes of benign acquiescence to its decline and the promise that the City of London and service industries would take up the slack.

Even the former Tory prime minister Harold Macmillan compared this to fallen rich grandees "taking in other people's washing".

He also pointed out that this was the road to ruin for British capitalism. This was all to no avail as, on the back of deregulation in the 1980s, the 'City of London', financialisation and service industries were the new 'winners' on the road to prosperity for the British people.

That promise is turning into ashes. One consequence of the banking collapse is that London alone could shed 370,000 jobs - one in 12 of the labour force - as a very minimum by 2010.

North Sea oil, which was the cushion that allowed Thatcher to screen her government from the effects of mass unemployment - by pushing the unemployed onto the benefits register - is in irreversible decline.

There will be a probable 40% drop in government income from this sector in 2009-10, following an upwards blip in 2008-9 due to high oil prices.

Commercial property is plunging in value and will take a peak to trough fall of at least 50%, outstripping the recessions of the 1970s and early 1990s.

Up to now, job losses in the service sector are still relatively small but with the looming collapse in volumes, values and profitability in the next quarter, there will be significant redundancies in all sectors.

The only growth sector in the fourth quarter of 2008 was agriculture, accounting for only 1% of GDP! Professionals - hitherto included amongst the middle class - will feel the chill economic winds to an extent not experienced in previous post-1945 downturns.

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