As the election approaches we're getting more claims that we'll soon be overtaking Germany and even the USA. Ignore them. We're doing badly. The prospects ahead after the election are gloomy.
British manufacturing has declined, is continuing to lose markets and must be revived. Its share of the economy is down from 20% to 10%, we're importing far more manufactured goods than we sell. We no longer make what the World wants to buy. Services, and particularly financial services, can neither support as many jobs nor pay our way in the World.
So we lose jobs and skills to become a low paid economy. Growth is lower because it`s manufacturing which generates it and that isn't attractive to the best brains. They go into Finance and the City to make money. Investment falls because the banks lend for mortgages not business.
The result is to make us a poorer less equal society. The rich can protect themselves but the people depend on jobs. So they're less able to provide for themselves.
We can`t pay our way in the World and are forced either to borrow overseas or sell off assets, property, houses, land, companies, anything that moves to pay for imports. So an increasing share of our productive capacity is owned by foreigners: the major car companies, the steel industry and an increasing share of the media, the banks, the chemical industry, the railways and property companies. Britain is fast becoming the first foreign-owned nation as the City earns fat fees by selling us off.
In some cases, such as cars, this has been healthy, but in most it`s damaged the ability to export and profits are now exported rather than invested here. Indeed the biggest corporations like Google, Facebook and Amazon which exploit the British market, fiddle profits through tax havens to avoid corporation tax on their British profits.
That way lies relegation and decline. The only answer is to rebuild, revive and expand manufacturing. Increasing it from 10% of the economy to 15% would allow us to balance our trade books and more would mean that we could generate the economic growth and the surplus to restore the public services an advanced society needs.
How do we do that? By getting the pound down to a competitive level. A substantial devaluation would make it profitable to export, sensible to invest and stimulate the growth of new industries. It can be done. In my view it must. Our competitors all started out with a very competitive currency which made exporting profitable. We now have to do the same
Because the City of London wanted a high exchange rate and governments wanted to fight inflation our exchange rate has long been too high. This subsidised imports and taxed exports. Our occasional devaluations, like that of 1992, boosted the economy but then petered out as the pound went back up.
Other countries have always used devaluation as an economic weapon. The euro is coming down now and will fall further but we've seen the pound as a phallic symbol: proud when it's hard, even though the consequences have been disastrous. We need a 25% devaluation to become an effective nation again. The alternative is a long, whimpering decline into a low wage, cheap-jack economy, exporting skills and people. I see no political party prepared to face that challenge.