Britain poised for third phase of industrial revolution

Re:Britain poised for third phase of industrial revolution by _b8r0 on Saturday November 06, 2010 @07:15PM (#1878023)

I'd say that the concept of our economy as a glorified hedge fund is going a bit too far. Ireland is a glorified hedge fund due to it's tax policies and financial investments. Britain is able to trade on it's asset base which is actually pretty large compared to the likes of Ireland. The manufacturing of which you speak has gone downhill, but given the country's history as the manufacturing powerhouse of the world initially, followed by the dissolution, renaissance and redissolution of it's base I don't see that as a huge problem. The British economy these days is largely a value-add services-driven economy. We don't manufacture because it's cheaper to get other countries to manufacture then develop services on top and make money through arbitrage on the difference. I'm not suggesting this is sustainable but it's the only thing we can do for now to remain competitive.

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Re:Britain poised for third phase of industrial revolution by fauigerzigerk on Sunday November 07, 2010 @03:10AM (#1879002)

Of course "glorified hedge fund" is an exaggeration and the UK does have pockets of innovation in industries like biotech. Services is 75% of GDP, 10% of GDP is financial services in the narrowest sense. That's compared to 7.5% in the US and 3.8% in Germany. How much of that huge services sector is linked to financial services? My own observation is that about half of all IT jobs in the UK are related to finance. I think it's fair to say that the value Britain adds to the world economy is dominated by investment banking.

There are historical reasons for that, but the extremely lax approach to regulation plays a huge role as well. The UK is where hedge funds and investment banks from all over the world go to do the most daring kinds of gambles. AIG was the biggest insurer in the world. Their small London office bankrupted the entire company. Why was that office in London instead of New York?

But my point is that any claim that the UK is leading the world in terms of a new type of knowledge driven, highly automated manufacturing model is completely delusional. It just doesn't exist outside of a few speeches David Cameron gave during the election campaign. Britain is not even on the map when it comes to technology.

I don't know if this is a big problem. Maybe the world can sustain a few bloated financial centres and will do so for a long time to come. But if it turns out that finance as a share of world GDP has peaked, then the UK is in a very dire situation, arguably the worst outside if Iceland.

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