Andrew Sentence is a former member of the Bank of England Monetary Policy Committee, the body responsible for setting UK interest rates. He is now Senior Economic Adviser at PwC and his latest book Rediscovering Growth, is part of the Perspectives series.
He spoke to the Prospector on a range of economic subjects, ranging from domestic concerns to macroeconomic policy. The interview will be published here in full over the coming days
Jay Elwes: What do you think of the growth that Britain is experiencing. Is it substantial?
Andrew Sentance: Well I think there was a perception, and now it’s turned out to be a mis-perception, that the UK economy was going to have a big rebalancing towards the manufacturing industry. At the time I felt this was somewhat unrealistic because the manufacturing industry depends on quite substantial investments that have to be made over a long period of time. And these are not just investments in capital. There are investments in skills, innovation and new technology which don’t just spring into life, just because you suddenly think “Ah we’ve just had a global financial crisis, let’s pull in the manufacturers.” Global manufacturing is an intensely competitive activity, and every country across the world wants to have a stronger manufacturing base.
So that rebalancing towards manufacturing has not happened to a significant degree. If anything, the share of manufacturing in the UK economy has continued to decline. It’s probably just over 10 per cent now, and that’s fallen from the late 70s and early 80s when it was about 25-30 per cent. We may see some return of manufacturing to the UK, but it’s not going to change the dials in our economy. We’re basically a service sector-orientated economy. Nearly 80 per cent of GDP is accounted for by services and over 80 per cent of employment is in services industries.
But services doesn’t mean lo…