The Disaster of Youth Unemployment

This is a demographic disaster.

From the Guardian:

Unemployment among Europe‘s young people has soared by 50% since the financial crisis of 2008. It is rising faster than overall jobless rates, and almost half of young people in work across the EU do not have permanent jobs, according to the European commission.

There are 5.5 million 15- to 24-year-olds without a job in the EU, a rate of 22.4%, up from 15% in early 2008. But the overall figures mask huge national and regional disparities. While half of young people in Spain and Greece are out of work, in Germany, Austria and the Netherlands it is only one in 10. In a further six EU countries, youth unemployment is around 30%. Of those in work, 44% are on temporary contracts.

The same phenomenon exists in the United States:

And why is this such a staggering  problem?

Firstly, the psychological impact: a whole lot of young people have never become integrated with the workforce. Many will become angry and disillusioned, and more likely to riot and rob than they are to seek productive employment. There is a significant amount of evidence for this:

Thornberry and Christensen (1984) find evidence that a cycle develops whereby involvement in crime reduces subsequent employment prospects which then raises the likelihood of participating in crime. Fougere (2006) find that increases in youth unemployment causes increases in burglaries, thefts and drug offences. Hansen and Machin (2002) find a statistically significant negative relationship between the number of offences reported by the police over a two year period for property and vehicle crime and the proportion of workers paid beneath the minimum before its introduction. Hence, there are more crime reductions in areas that initially, had more low-wage workers. Carmichael and Ward (2001) found in Great Britain that youth unemployment and adult unemployment are both significantly and positively related to burglary, theft, fraud and forgery and total crime rates.

Additionally unemployment is correlated with higher rates of suicide and mental illnesses like depression. And of course, the longer the unemployment, the rustier workers become, and the more skills they lose. Frighteningly, the numbers of long-term unemployed are rising:

Second, the economic impact: people sitting at home doing nothing don’t contribute productivity to society. In a society faced with falling or stagnant productivity, that is frustrating; there are lots of people sitting there who could be contributing to a real organic recovery, but they are not, because nobody is hiring, and (perhaps more importantly) barriers to entry and the welfare trap are crowding out the young, and preventing the unemployed from becoming self-employed. It also means higher welfare costs:

That leads to higher deficits, and greater government debt.

So it is not just a demographic disaster; it is also a fiscal one.

Britain’s Orwellian Nightmare?

As a British citizen, I find Britain’s recent authoritarian creep to be deeply unsettling. First we greatly diluted our ancient rights of habaeas corpus. Then we created the world’s largest video surveillance network (which of course was completely powerless to prevent last summer’s riots).

Now we have started locking people up for comments on Twitter.

From Brendan O’Neill:

If you thought it was only authoritarian states like China or Iran that imprisoned pesky bloggers and tweeters, think again.

This week, Britain became a fully paid-up member of that clique of illiberal intolerant, tweeter-harassing states.

On Tuesday, at Swansea Magistrates Court in Wales, Liam Stacey, a student, was imprisoned for 56 days for writing offensive tweets.

Fifty-six days. Two months. In an actual jail. For tweeting. It needs to be spelt out like that in order to show how shocking it is that in the 21st century, in a nation that gave us such great warriors for freedom as The Levellers and John Stuart Mill, a young man has now been banged up for expressing his thoughts.

Stacey’s thoughts were far from pleasant ones. In fact they were offensive and repugnant.

On March 17, Fabrice Muamba, a 23-year-old black football player for Bolton Wanderers, collapsed with cardiac arrest during a match against Tottenham Hotspurs. Many people were shocked, and before long a #PrayforMuamba hashtag took off on Twitter.

But Stacey, who claimed he was drunk at the time, didn’t fancy praying for Muamba, and so instead he tweeted:

“LOL. Fuck Muamba. He’s dead.”

(Muamba did not die, though he remains critically ill in a London hospital.)

56 days in prison? For expressing a distasteful opinion? Frankly, I find the notion of convicting someone of such an offense more offensive than Stacey’s words.

Most recently, Parliament is enacting a law to allow for the monitoring and recording — in real time — of all online activity (presumably including my work) by GCHQ.

From the BBC:

The Home Office has said laws allowing the monitoring all emails, texts and web use in the UK will be brought in “as soon as parliamentary time allows”.

Home Secretary Theresa May says “ordinary people” will have nothing to fear- but there is opposition to the idea from all sides of the House of Commons.

All of this is troubling. Throwing people in jail for expressing unpopular opinions? That seems un-British, and seems to not tally with the idea that we should live and let live. I don’t have a problem with criminalising speech that is an incitement to imminent violence (e.g. “kill that man”). But criminalising opinion? Not only is that paternalistic, that’s a sticky slope to thought crime. And why is that a problem? In a society where we are not free to express any opinion we like — even deeply unpopular ones — innovation is surely stifled. Innovators and freethinkers are forced to think tricky questions (“will I be jailed for expressing this opinion?”) before they publicise their ideas.

And why would GCHQ need to monitor the entire internet? If they need to gather evidence to prevent imminent criminality, why not get a warrant, and monitor a suspect? The fact that they are writing a law that acts as a warrant on all of us suggests that contrary to the Home Office’s statements, we are now all suspects.

Britain has a rather unique legal and political system. Nothing is really set in stone other than the supremacy of the sovereign — in other words, the Queen. Right now, sovereignty has been delegated to Parliament, and the Queen retains only a ceremonial role. But because the Parliament is sovereign, it is free to pass any law it wishes. No rights are absolute, no system is set in stone. There is no first amendment guarantee to free speech. And even though Britain is a signatory to the European Convention on Human Rights, that piece of legislation is phrased so that governments can curtail rights for the “greater good”.

Some legal flexibility can be good. British society has been remarkably free and remarkably stable, certainly in contrast to many other nations. But let’s be honest: authoritarianism can blight any nation. We shouldn’t be complacent to that threat.

And the overarching and striking problem with this authoritarian creep is mostly that it is a waste of money. As I wrote last week terrorism and civil disorder and the expression of unpopular opinions (and all of the things that this authoritarianism is supposed to quell) is of minimal threat to the West (and of course the expression of unpopular opinions is largely beneficial). More people are killed by being crushed by furniture than by terrorism. While trillions are spent on homeland security and the “liberation” of foreign lands, domestic infrastructure is neglected, and businesses and workers lose out as they pay in taxes for the expenses of large authoritarian interventionist government. CCTV has little effect on crime.

And certainly, the social effects of authoritarian creep may be huge. How many legitimate criticisms of the government will go unpublished due to fear of censorship or monitoring? How many people will spend time in jail — and face life with a criminal record — just for expressing an opinion? How many innocent people will spend time in jail as a result of monitoring mistakes or misinterpretations? How many good businesses and ideas will not receive funding due to productive capital being redirected to the government coffers to pay for authoritarian interventionism? How many people will waste their productivity working as government snoops when instead they could be deploying their minds and skills in creating valuable products and services that would improve our economy?

But above all, what would George Orwell think? Big brother is watching and recording us all. Every time we go online, we display our thoughts, our interests, our desires, our curiosities, our sexual preferences, our politics. All of these things are recorded by the state — a state which seems to have no problem with locking people up for expressing unpopular opinions.

Orwell understood that that was a peril to everything — our homes, our lives, our rights, our society, our economy and the very fabric of our existence.

Chart of the Decade

This chart tells millions of stories. I’m trying to get my head around its implications.

That’s right: since 1984 (surely an appropriate year) while the elderly have grown their wealth in nominal terms, the young are much worse off both in inflation-adjusted terms, as well as nominal terms (pretty hard to believe given that the money supply has expanded eightfold in the intervening years). So why are the elderly doing over fifty times better than the young when they were only doing ten times better before?

Are young people a stupefied generation coddled by parents and government, addicted to welfare, junk food, drugs and reality TV?

To some extent, but are they any less fiscally and morally responsible than the marijuana-smoking, free-love-embracing, national-debt-accruing baby boom generation? That’s a matter of opinion, but my answer is probably not. Baby boomers hate Ron Paul, while the under-35s seem to love him.

Is it due to government policies that favour the elderly and screw the young?

America is suffering from excessive consumer debt:

Net worth is calculated by subtracting debt from assets. The biggest debt for most people is a mortgage. So having more mortgage debt or less mortgage debt tends to be a pretty good determinant of net worth. (And no — unlike in the United Kingdom and Australia which have a severe problem with housing affordability — housing in the USA is still cheap today priced in wages)

The elderly have very often already paid off their mortgages — no doubt helped by the 1980s and 1990s where both stock prices and house prices grew rapidly. And why did rise so rapidly?

Some say that it came on the back of excessive expansion of the money supply beyond the economy’s productive capacity. But that doesn’t seem quite true:

The money supply grew in tandem with industrial production. This was no bubble, but organic growth (albeit as I have shown before on the back of cheap Chinese goods and cheap Arab energy).

My hypothesis is that the present situation is a product of government expansion.

Here’s government expenditure as a proportion of GDP:

Government spending in democracies very often tends to constitute a transfer of wealth from non-voters to voters (as well as groups that can’t afford lobbyists to groups that can afford lobbyists — perhaps that is one reason why corporate profits are soaring while youth unemployment remains elevated, and why Wall Street banks get bailed out, but delinquent small businesses do not).

Here’s the voter turnout by age in the 2004-2008 Presidential elections:

Older people vote in droves. Politicians want their votes and therefore promise them more free stuff — medicare, medicaid, services — and they vote for whoever offers them the most.

The biggest issue though, is this:

Keynesians may say that this reflects a government’s failure to create jobs for young people. They claim that the problem is that there is not enough money circulating in the economy, and that government can “raise demand” by pumping out more cash. But there is plenty of money in the economy; so much money that Apple have built up a $90 billion cash pile. So much that China has built up a $3 trillion cash pile. So much that banks are holding $1.6 trillion in excess reserves below fractional lending requirements.

More likely is the reality that overregulation and barriers to entry are preventing the unemployed from picking up the slack in the jobs market. As John Stossel reveals in a recent documentary film,  in New York City it costs $1 million to get a licence to drive a taxi. Anyone who wishes to operate a food cart, or run a lemonade stand has to traverse reams of bureaucracy, acquire health and safety certificates, and often pay huge fees  to receive the “necessary” accreditation. While some barriers to entry are necessary (e.g. in medicine), in other fields it is just an unnecessary restraint on useful economic activity. In many American cities it is now illegal even to feed the homeless without government certification and approval. Citizens who defy these regulations face fines, arrest, and even imprisonment.

In a recent article, the Economist noted:

Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future). Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.

The other force that makes American laws complex is lobbying. The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress’s last, failed attempt to regulate greenhouse gases was even worse.

Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America’s share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is.

The truth may be that the inability of the unemployed to become self-employed is the force that is squeezing the jobless most. Certainly, job migration overseas has changed America, but why should it mean continued elevated unemployment? There is enough money to keep the economy flowing so long as there are opportunities for people to make themselves useful in a way that pays. With the crushing burden of overregulation and the problem of barriers to entry, these opportunities are often restricted to large corporations.

These issues of youth unemployment and growing inequality between the generations are critically important. Unemployed and poor swathes of youth have a habit of creating volatility in response to restricted economic opportunity.

Britain Isn’t Working

George Osborne claims that spending cuts will produce a recovery.

From the Guardian:

The main test of a budget at this time is what it does for the recovery and growth of the British economy. George Osborne has repeatedly made clear that he wants to be judged by this test. He believes that deficit reduction is a growth policy which will be vindicated by its results. Growth has been postponed but, he insists, it is about to happen. So is he right?

It doesn’t look like it:

UK GDP has ground to a halt, while the United States has ticked slightly upward.

Now here’s unemployment:

Looks painful.

But at least we’re paying off the debt right? Nope:

Readers are of course advised to ignore the nonsensical future projections — particularly those for the United States — and focus instead on the fact that the UK is still amassing debt in spite of austerity.

So what the hell are we doing? Unemployment is ticking up, GDP is stagnant, and debt is still rising? Is this policy supposed to be working? Does the Cameron government not understand that cutting government outlays during a recession to pay down debt leads to falling tax receipts, which leads to bigger deficits (exactly what has happened!)?

The truth is — as Keynes noted — that the time for austerity at the treasury is the boom, not the bust. The only exception to this is if you can give back enough money to the taxpayer in tax breaks to offset the deleterious effects of spending cuts (as Ron Paul recommends), which itself is a form of spending. That way, government outlays remain roughly the same.

Cutting government waste is always a good idea; but using the savings to pay down debt (which very often in the modern world means sending the money overseas) during a recession seems like a very bad one. And it should be noted that the Cameron government isn’t even really cutting back much on what I consider to be waste. Britain spent billions effecting regime change in Libya.

The System is the Problem

From the BBC:

US credit ratings agency Moody’s has put the UK on negative outlook, meaning it thinks there is more chance the economy may lose its triple A status.

France and Austria, who also share a top triple A rating, have been similarly graded. Italy, Spain and Portugal’s ratings have been lowered.

Moody’s blamed the eurozone crisis for the adjustments.

The UK chancellor remains committed to his policy of austerity whilst the opposition warns this could backfire.

The negative outlook for the UK means Moody’s thinks there is a 30% chance of a downgrade within 18 months.

BBC economics editor Stephanie Flanders said there was no suggestion that the agency would prefer the UK government to change its economic policy of austerity.

Now, I believe that the idea that a Western government bond can today be a AAA investment is very dubious. Simply, the current phenomena of negative real interest rates and debt saturation, and the problems of deleveraging mean that it is very unlikely that an investor in government debt will get back their purchasing power: either by inflation, or by default, most such investors in the next decade will probably lose the skin on their noses. But that is a side issue.

Since David Cameron and George Osborne announced their policy of austerity, my thinking on fiscal policy has somewhat evolved. Given that we know that a high residual debt load has a damaging effect on growth, my view has always been that we need to reduce the debt load as fast as possible. The question was always how we should best go about doing so. I knew from the beginning that there was always a danger that in an economy already dependent on high government expenditure, fast and hard cuts — especially in an already-depressed economy — would probably lead to a contraction in tax revenues, thus producing higher deficits and less debt reduction.

This prospective problem has been expressed quite well in this graph:

Furthermore, because of the high residual debt load, cuts in spending would merely go toward paying down debt. This means that the government will still be sucking just as much capital out of the economy as before. While cutting taxes might prove a huge plus , the presence of a huge debt load means tax cuts will be unaffordable, and thus there would be no such boost.

The greater problem, of course, is that in an economy that is greatly centralised around government, cutting spending very often translates into cutting real output, and real economic activity. Now during an economic boom, this is fine — the growing market can pick up the slack. But during an economic contraction, this just takes the problem of falling output and exacerbates it.  One only has to look so far as Germany under Heinrich Brüning,( or the problems currently afflicting the Euro Zone) to understand the problem:

Bruning applied the [austerity] medicine to Germany, and the resulting backlash was so intense he suspended parliamentary democracy and ruled by emergency decree, setting a fine example for the next guy who took power. After just two years of “austerity” measures, Germany’s economy had completely collapsed: unemployment doubled from 15 percent in 1930 to 30 percent in 1932, protests spread, and Bruning was finally forced out. Just two years of austerity, and Germany was willing to be ruled by anyone or anything except for the kinds of democratic politicians that administered “austerity” pain. In Germany’s 1932 elections, the Nazis and the Communists came out on top — and by early 1933, with Hitler in charge, Germany’s fledgling democracy was shut down for good.

Of course, in the modern world there is a larger problem even beyond fiscal contraction leading to a contraction in real output. This is the problem of fiscal contraction leading to financial collapse. Simply, as Greece have enacted more and more austerity, they have collected less and less taxes. And this means that they are closer to closer to default. Now, because Greece’s debts have been securitised and spread around the European banking system, a default on Greek debt could lead to mass bank insolvencies in European, which could lead to mass bank insolvencies around the world as more and more counter-parties default on their obligations.

As I wrote last month:

As we learned a long time ago, big defaults on the order of billions don’t just panic markets. They congest the system, because the system is predicated around the idea that everyone owes things to everyone else. Those $18 billion that Greece owes might be owed on to other banks and other institutions. Failure to meet that payment doesn’t just mean one default, it could mean many more.

That is known as a default cascade. In an international financial system which is ever-more interconnected, we will soon see how far the cascade might travel.

This is a bizarre situation. The intuitive response to excessive debt — belt-tightening; spending less, and saving more — is not only wrong, but it is potentially dangerous.

Modern Keynesians believe that the answer to these problems is stimulus and monetary expansion: that government ought to increase spending, and that monetary authorities ought to print more money. Essentially, both of these ideas amount to reinflating the bubble. Stimulus allows for the economy to keep ticking over while the private sector deleverages. Money-printing and inflation shrinks the debt relative to the amount of money in the economy. There is a real advantage here: bondholders — as opposed to taxpayers — take a hit as their lendings are repaid in debased currency. As I have noted in the past, I believe (as did Jesus) that creditors are the ones who ultimately must take the hit when it comes to addressing the problem of debt saturation. After all, in a market economy, all investments — even those made to very wealthy debtors — carry risk. Unfortunately, the inflationary Keynesian method hits savers and investors, and those living on a fixed income.

Worst of all, these aids ignore the real problem, which is not the recession at all, but the thing that caused it — the huge preceding credit-fuelled bubble. And therein lies the problem.

As I wrote way back in October:

Modern economics has been a great experiment:


Economic history can be broadly divided into two eras: before Keynes, and after Keynes. Before Keynes (with precious metals as the monetary base) prices experienced wide swings in both directions. After Keynes’ Depression-era tract (The General Theory) prices went in one direction: mildly upward. Call that a victory for modern economics, central planning, and modern civilisation: deflation was effectively abolished. The resultant increase in defaults due to the proportionate rise in the value of debt as described by Irving Fisher, and much later Ben Bernanke, doesn’t happen today. And this means that creditors get their pound of flesh, albeit one that is slightly devalued (by money printing), as opposed to totally destroyed (by mass defaults).

But (of course) there’s a catch. Periods of deflation were painful, but they had one very beneficial effect that we today sorely need: the erasure of debt via mass default (contraction of credit means smaller money supply, means less money available to pay down debt). With the debt erased, new organic growth is much easier (because businesses, individuals and governments aren’t busy setting capital aside to pay down debt, and therefore can invest more in doing, making and innovating). Modern economics might have prevented deflation (and resultant mass defaults), but it has left many nations, companies and individuals carrying a great millstone of debt (that’s the price of “stability”):

The aggregate effect of the Great Depression was the erasure of private debt by the end of World War 2. This set the stage for the phenomenal new economic growth of the 50s and 60s. But since then, there’s been no erasure: only vast, vast debt/credit creation.

And that is the real problem we face today: the abolition of deflation, the abolition of small defaults, the abolition of the self-correcting market.

Neither austerity, nor stimulus are a sufficient remedy for today’s financial problems (let alone today’s economic ones). What is needed is liquidation, so that the old rubbish is cleared out, the system is no longer congested by debt saturation, and new opportunities are opened up.

Simply, everything we have experienced over the last twenty years — from Japan in the ’90s, to America in ’08, to the ramifications of Greece’s default, to the growing trade war between America and China — is a lesson that credit-based money is not robust. It is so weak to the problem of credit contraction that — once the point of debt saturation is inevitably reached — every time there is a contractionary event, monetary authorities must pump the market with new money, and highly-indebted governments must (unless they are foolish like Britain’s present government, and want to see falling consumer confidence, business confidence, real GDP, industrial output, and productivity) maintain or increase spending instead of reducing spending and saving money. Otherwise, the system itself is endangered. It is a fundamentally fragile system. 

Ultimately, nature always wins. Ultimately, the debt saturation problem will be taken care of either by currency collapse, or by defaults (and probably systemic collapse, and a new global financial order), or by war, or by some kind of debt jubilee. I don’t know which. I hope for the latter. It seems kinder.

China as Investor

It seems only a few days ago that I was explaining why China was not going to save the PIGS’ bacon — if they want to invest in Europe they can wait until the situation severely deteriorates to get more bang for their buck.

Now Robert Peston is talking up Chinese investment in British infrastructure:

Perhaps the most important cause of our economic malaise is that for years as a nation we have been living beyond our means, in deficit with the rest of the world, buying from other countries far more than we produce, till our indebtedness became unsustainable.

By contrast China has been consuming far less than it produces, accumulating vast surpluses.

So as we work down our debts, the hope of the government has been that the Chinese could be persuaded to invest some of their vast surpluses in our infrastructure, in a way that would ease the pain of our economic slowdown and would yield a decent return to China over the long term.

That’s why the Chancellor of the Exchequer was today so delighted that China’s sovereign wealth fund, China Investment Corporation, which controls more than £250bn – has bought a stake of almost 9 per cent in London’s water and sewage business, Thames Water.

Britain has been happily munching on that Chinese-manufactured free lunch of consumer goods and cheap labour, but now she wants to enjoy the benefits of China’s years of thrift and productivity by having China pay for infrastructural improvements.

The first thing to note is that selling equity seems much better than selling debt. A lot of Chinese resentment toward America stems from America’s protectionist attitude to its economy — America won’t let China freely acquire equities with their surplus dollars. Debt — especially debt that gets paid with newly-printed money — creates a relationship of mutual antagonism. Creditors and debtors have a history of trying to screw one another. Equity — i.e., Chinese ownership — gives more of a shared incentive for success.

The second thing to note is that China may still be reluctant to invest now. With Britain holding a huge debt bomb — and looking at a future of excruciating deleveraging — it seems pretty likely that China will be able to get more bang for their buck in the near future than they can now.

Thirdly, as a result of the Opium Wars, the governing class in China hold a grudge against Britain. A shared future — with China as an investor in Britain — would undoubtedly go a long way to heal some wounds.

And China, I should add, do infrastructure quite unlike anyone else:

While America and the West have shifted their economies toward endless consumerism, tourism and globalisation China has been busy building herself into the greatest industrial powerhouse in world history. Infrastructure undoubtedly plays a huge role in that.

So it largely seems like a good idea. But there’s still a long way to go before we can truly say China is an investor in Britain. Until then, Britain needs to be the leading investor in British infrastructure.

Britain Separates Retail and Investment Banking — But Will it Work?

A government-commissioned report led by John Vickers into Britain’s financial system has been published — and its chief recommendation is a separating wall between retail and investment banking. This is a very similar system to what prevailed in America until 1996 under the Glass-Steagall Act of 1933. The chief intent is to prevent the endangerment of customers’ savings, mortgages and pensions through banks’ much riskier and more free-wheeling investment arms. This means that the risky but profitable investment banking sector would no longer be considered infrastructural, and — in theory — would be no longer be eligible for bailouts.

From the BBC:

There has been widespread support for a government-backed commission that has recommended UK banks ring-fence retail from investment banking.

The Independent Commission on Banking, led by Sir John Vickers, said it would “make it easier and less costly to resolve banks that get into trouble”.

The ICB called for the changes to be implemented by the start of 2019.

Chancellor George Osborne said the report would mean UK banks could remain competitive.

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I’ve talked a lot recently about reindustrialisation. Now, I’m fairly certain David Cameron hasn’t been reading what I write. But I’m also fairly certain we have been looking at the same statistics: Manufacturing has shrunk from nearly 40 percent of Britain’s gross domestic product in the late 1950s to not much more than 10 percent now. And while Cameron might not put it this way, that has left Britain as a shrivelled husk of an economy: overly reliant on services, foreign oil, Chinese manufacturing, junk food, corporate handouts, and too-big-to-fail-too-big-not-to-fail financials. So it’s no surprise that Cameron has been talking up manufacturing. From Bloomberg:

Prime Minister David Cameron has latched on to manufacturing as a cure for Britain’s economic hangover and its 7.9 percent jobless rate. U.K. Business Secretary Vince Cable says that for sustainable, long-term growth, “manufacturing is where we need to be.”

“One of the main growth sectors of the economy in recent years has been banking,” Cable said in an interview. “For reasons that are blindingly obvious, that’s not going to be so important in future.”

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