Just watched Panorama ( a BBC documentary), on Gordon Browns 'Economic Miracle'. Apparently what has sustained the longest period of economic growth in recent history has been consumer and public spending. Even with spending, inflation has remained low. Low inflation has been as a consequence of cheap imports form the far east and China. This as allowed us to avoid the boom and bust economic cycle of the past (high spending-> high inflation -> high interest rates -> economic slow down).
The growth of imports as been at the cost of local manufacturing. So we no longer build stuff, but stay afloat by selling things to each other built cheaply else where. And of course there's the growing 'service sector' what ever that is (retail parks, DIY super stores, etc).
I'm no economist, but I know that most people feel pretty insecure at work. Most people are working harder for less. Job stability is a thing of the past, and most people have come to accept short term contracts as part of life. The only thing that seems to produce 'a feel good factor' is house prices - and who knows when that will suddenly come to an end.
The scariest thing that came out of the programme for me, was that once UK manufacturers had moved their production to China, the benefits to the UK economy (lower retail prices) will be realised the once. Once things have settled down, low prices and consumer spending, can no longer be relied upon to sustain future growth. Worst still, without a manufacturing base of our own, we will become sensitive to price inflation in China. Should the Chinese decide to pay themselves more, then that will be reflected in higher prices in the UK.
So after years of protectionist EU trade policies on food. We will suddenly find ourselves dependent on others when it comes to manufactured goods.
What will become of the average man on the street? After all we all can't work in retail parks, and I don't think we're going to loose our appetite for consumer goods any time soon. Maybe the French have the right idea, and it is time to start putting up the barricades!
It really does look like unstable times ahead. Economic power in China, Military power in the US, the Europeans in the middle. Friction between China and the US seems inevitable to me. Some how I feel that the Americans with their vast resources and dynamism, will be able to meet the Chinese challenge. I fear that China's gains will be at the expense of the Europeans, including the UK.
I don't fancy learning Mandarin, so it looks like I need to get myself a Green Card quick!