Britain makes things again

By This Is Money
Updated: 03:31 EDT, 10 November 2010

There appears to be a collective determination in Britain to dwell on the negative.

But the real message coming through from the IMF and the manufacturing sector is that after the 'great contraction' there is a rebalancing of the economy.

Barclays Capital may have had a dismal quarter (with the exception of staff bonuses) but chunks of British industry, including companies as different as Babcock and Jaguar Land Rover (both reporting sharply higher profits) are doing very nicely.

Rolls-Royce has managed to shake-off recent Trent 900 safety scares with a £750m engine order from Chinese Eastern Airlines.

The manufacturing sector, long the sick child of the UK economy, is experiencing strong underlying growth of 4.8% so far this year and orders are robust.

Trade may not have improved as quickly as might have been hoped, but net exports over the whole of the third quarter were up by 3.2%, with a surge in sales to non-EU trading partners.

So David Cameron's high profile China trip could well be the zeitgeist. As a result of the shifts taking place in the economy, the non-oil trade sector actually made a positive contribution to demand over the last three months.

Much of the focus of the chattering classes is on budget deficits, High Street VAT gloom, and hard luck stories from the banks.

But the good news tale is of a manufacturing and trade renaissance.

Long may it last.