Thursday, Dec 10, 2009

Exports weak

Telegraph: UK trade deficit widens in October

A buoyant financial sector making profits abroad and repatriating those profits into sterling, holds the value of sterling up. The financial industry is the same as the Dutch disease, ie repatriating profits from oil sales maintains an uncompetitively high level for sterling. Given that we are supporting and will support the financial sector, we cannot expect manufacturing growth also. This comes down to a national choice about what industries we as a nation wish to have, and in that context, the government has chosen high tax revenue low employment finance over low taxation high employment manufacturing. Arguably, the boost to exports from devaluation is equivalent to decamping by the financial sector.

Posted by stillthinking @ 11:11 AM (1173 views)
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1. stillthinking said...

This is why New Labour have always been so schizophrenically pro-finance, because it enables the socialist central state model that they are so fond of. A necessary evil.
This is also why we are in such dire straits, because the failure of the financial sector, has revealed the socialist central state model operating over the rest of the UK, typified by 60% state spending in some areas, and 50% in basically the majority excluding London. That is an absurb ratio to the private sector, and rather than virtous economic chains of sustainable economic activity, the private sector can only exist in so far that it panders to secondary state spending. Our private economy, in other words, is the same as a private sandwich/lunch seller who has permission to enter council offices.

Thursday, December 10, 2009 11:20AM Report Comment

2. rumble said...

Yep. Government size and trouble are directly proportional. The more they meddle the more they muddle.

Thursday, December 10, 2009 12:35PM Report Comment

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