Some times things come to your attention that make you think – but that does not mean that there is a connection or cause and effect.
Vince Cable warns of complacency
Today Vince Cable is speaking to the CBI today and he will tell them that there is no place for complacency, a bit of a side swipe and George Osbourne’s triumphalist “sticking to plan A” approach of earlier in the week. (Read more)
There are also other voices warning of the recovery, in particular are we recreating the unbalanced economy we had before, with too much relying on the city?
Despite the critics the UK does have a manufacturing industry, we will produce more cars in the UK this year than we have ever done. Cambridge hi-tech cluster us responsible for a great many successes most prominently ARM the mobile device chip manufacturer that has prompted Intel to focus on this market that it is missing out on.
A warning from the past
But does it really matter?
As long as the economy is growing does it matter if it is the financial sector is our largest earner?
Well I think it does, there appears to be a conflict of interest between the financial services sector and manufacturing, well more of a reversal of roles. Rather than the financial sector supporting the generation of wealth from manufacturing, retail or services it appears that the financial sector is sucking out the wealth from these sectors for itself.
So this is the thing that made me wonder, Richard Murphy posted the story of the MG Rover collapse in 2005 and the role of Deloitte. The Financial Reporting Council has fined Deloitte £14m for their role in the company collapse, the fact that they were both advising the business and auditing their accounts and earning some £30m in the process. (Read more)
Is the future brighter?
We are assured that what happened with MG Rover cannot happen again, the banks are even saying that derivative trading is now safe and will be an important part of financial services. (Read more)
I am prepared to accept that I might be an old sceptic – but I was brought up on the old adage “Profit is sanity, turn over is vanity!” much of the financial services business relies on margins of less than 20% often a lot less than that, much of manufacturing and retailing operates on far greater margins. So it seems to me to make sense to have your risk balances across all sectors and not rely on the city, small scale manufacturing, top end engineering are actually a well kept secret of the UK economy – it is a shame that they do not get the support they deserve.