Why is the UK economy so heavily focused on the financial services sector, rather than manufacturing?

18 September 2016

Why is the UK economy so heavily focused on the financial services sector, rather than manufacturing?

Why is the UK economy so heavily focused on the financial services sector, rather than manufacturing? Professors Peter Scott and James Walker have investigated this phenomenon in a recent research project.

Why is the UK economy so heavily focused on the financial services sector, rather than manufacturing? Professors Peter Scott and James Walker have investigated this phenomenon in a recent research project.

The financial services industry is the crown of the UK economy but also one of the most at risk, given the uncertainties of the UK’s new Brexit reality. As the research by Peter and James explains, during the 1950s (when the financial services sector was struggling to recover from post-war austerity), policy-makers sought to restore sterling as a leading international currency and to re-establish London as a major financial and trading centre.
The principal tactic was to depress demand for consumer durables, in order to boost the balance of payments. This policy wrought havoc in the durables manufacturing industries, where domestic sales dropped by up to 50%. When these controls were eventually eased, firms then lacked the capacity to scale-up to meet consumer demand, with imports from overseas competitors filling the supply gap.
This stop–go culture crippled the durables manufacturing sectors that once offered high wages and rapid long-term employment growth in Britain’s provincial regions; the very regions that are now set to suffer the most from Brexit.

For more information on this research, please contact Professor Peter Scott on p.m.scott@henley.ac.uk or Professor James Walker on j.t.walker@henley.ac.uk.

 

Contact Image

Contact Us

If you have any questions, please contact Daria Radwan by email at d.m.radwan@henley.ac.uk or by phone on +44 (0) 118 378 6597.