Manufacturing\’s share of GDP in the UK is also little different from the share in other advanced economies, with the notable exception of Germany, where it is about 24pc. But in France, manufacturing\’s share is about the same as in the UK, and in the US it is actually lower.
True, manufacturing used to account for a much larger share of the UK\’s GDP. In 1970 it was more than 30pc. But the subsequent sharp fall wasn\’t exceptional either. All advanced countries have experienced the same phenomenon. Nor is this all about losing manufacturing to emerging economies in Asia and elsewhere, where costs are lower. The simple fact is that as people get richer they tend to want to spend a higher proportion of their incomes on services rather than on goods.
This does not mean that the absolute amount of goods that people want to buy falls or, therefore, that the absolute amount of manufactured output in the UK must necessarily fall over time. Indeed, until recently anyway, it didn\’t. Despite the fall in the sector\’s share of overall output, in absolute terms, the amount produced by the manufacturing sector has increased decade by decade.
I\’ve mentioned this sort of stuff before. Peak manufacturing output in the UK was in 2005. Yes, manufacturing output was higher at the end of Maggie\’s reign than it was at the beginning, higher than it had ever been.
It\’s manufacturing employment which has taken the hit and that\’s a good thing, it reflects increasing productivity. AKA \”getting richer\”.
If there has been this \”collapse of manufacturing\”, this \”evisceration\”, then it\’s happened in these last 5 years. And we\’re still not sure how much of that is to do with the recession rather than structural change. For, yes, manufacturing output does vary more than the general output of the economy.