Question from Alfred Farnell

A letter to eurofacts which was published on 20th October 2006.

Your report (eurofacts, 22nd September) on the findings of the cost-benefit analysis for Switzerland of EU membership, commissioned by the Swiss government, prompts one to wonder what if anything will induce any likely British government to do the same for Britain.

One piece of data which would, I believe, resonate well with the British public is that for the last several years the aggregate trade with the EU of the United States, Canada and Australia is broadly the same as Britain’s.  If you add in Japan, the aggregate comfortably exceeds Britain’s, yet these four countries pay precisely nothing to the EU for the privilege.  Their trade relations with the EU are subject only to the rules of the World Trade Organisation to which virtually all countries and organisations involved in trade, including the EU, belong.

The so-called ‘Single Market’ may or may not be an advantage for those countries selling into EU countries but it is not something countries outside the EU feel they should pay for.

When put this way, a very wide range of people would, I believe, actively question our EU membership and its colossal annual fee (£12 billion and rising), particularly when this government cannot, apparently, afford proper provision for the care of our troops in Iraq and Afghanistan or pay them properly.

A talk given to the Cheshire Branch of the European Federation of Women on 21st September 2000.

 
It compares and contrasts the two Continents.

To read the text please click on the link to the “External Relations” page of the Britain Watch website.

A letter to the Editor of the Daily Telegraph which was published on 28th January 1995.

Your City Comment (Jan. 26th) and leading article (Jan. 27th) on the Greenbury Committee set up to head off legislation restraining boardroom salaries will provoke a wry smile from those thousands of your readers who have lost their jobs due to “restructuring”.

One might as well expect a committee of casino owners to propose effective rules for restraining gambling as to expect the Greenbury committee to propose anything serious on salary levels.

In place of the Government’s ineffectual deploring of boardroom excesses, here are a few specific proposals which could easily be carried out:

• Abolish share options.  These encourage the short-term pushing up of the share price (usually accomplished by “restructuring””) instead of the long-term building of business, which should be encouraged.
• Amend the Companies Act so that any bonus or profit-sharing is paid at the same percentage of salary to all employees, including directors. After all, directors are already paid many times the salary of the average employee.  There is no reason why any bonus, which is earned by the whole company, should be divided disproportionately to salary.
• In considering a salaries code of practice, take an example from the world’s most successful industrial economy, Japan, where the chairmen of even the largest corporations rub along on about 10 times average salary rather than the 30 or 40 times which has become the norm here.

 
If certain chairmen of United Kingdom corporations aspire to salaries, applying in the United States, let them resign their jobs here and take their chances in that country.

This is an article about the sale of Rover to BMW which was published in the Independent on 21st February 1994.

Despite the general chorus of approval in the City and financial press, the proposed sale by BAe of Rover to the German company BMW, if approved by their respective shareholders, brings into sharp focus fundamental faults in British capitalism which, if not corrected and corrected soon, will take our country to industrial oblivion.  At £4,300 million turnover, the transfer of Rover is the largest single loss of control of industrial output and market ever – about 4% of our gross manufactured product, dwarfing other recent transfers like Jaguar to Ford (about £800 million) and ICI Fibres to Dupont (about £300 million).

Contrary to the City comment at the time of the announcement of the sale, it is not chauvinistic to safeguard your most strategic industrial capacity from foreign takeover.  To every foreign engineer and manager I know, it is the merest commonsense on the grounds of the opportunity difference between having one company and having none.  I doubt if there is a single British professional engineer who does not take the same view.

In terms of GNP per head, Britain has in 30 years slid from near the top to near the bottom of 24 Western industrial countries in the OECD.  At the same time, British manufacturing operations have hauled themselves from near the bottom of the efficiency league to near the top, Rover being an outstanding example.  We who work with or for British Industry, as well as the millions outside who depend on it for a living, are entitled to ask what magic insight is it, denied the rest of us, that allows a tiny group of financial institutions and corporate managers to watch complacently as British industry is expelled from one sector after another, and yet swear it is the inevitable “restructuring” of the international economy which is working in Britain’s long-term interest?

The Rover sale exposes three of the most profound issues for national debate which must not continue to be brushed aside by the City establishment and their allies in the present government.

Much has already been written about the City’s incompetence and short-term outlook in industrial matters and there have been occasional signs that it is prepared to defend itself against these charges.  But Rover is the clinching case for those of us who believe the charges are made out a hundred times over.  Essentially Rover is a growing success which is being sold at a failure price, to enable British Aerospace to relieve the difficulty arising from its aircraft leasing arrangements.  As a rule of thumb, a well run modern manufacturing company will have capital assets valued somewhere in the region of its annual turnover.  On this basis Rover is being sold at well under half its value, even if you count the takeover of debt as part of the price: in fact LandRover on its own is worth the £800 million cash being paid.

This leads to the first fundamental point.   Why do the financial institutions place such blind faith in the abilities of a gilded circle of corporate managers, who lacking technical expertise fully to get to grips with the businesses they are entrusted with, are whisked from one chairmanship to another, in an elaborate game of musical chairs in which every participant receives a huge prize every time the music stops?  In high tech manufacturing such as cars and aerospace, it is the three-way conjunction of long-term product research, process design and marketing which ought to be the primary concern of the board, as it clearly has been in our successful chemicals and pharmaceuticals businesses.  Almost exactly two years ago Akio Morita, chairman of Sony – one of the companies that have propelled Japan to world economic leadership said it was “very curious that so many British industrial companies are headed by accountants or lawyers . . . in Japan almost every major manufacturer is headed by an engineer or technologist . . . I do not believe accountants and financial professionals should be at the helm of industry”.  Just as British manufacturing has learned enormously valuable lessons from the Japanese, why do not the financial institutions do likewise in their own interest and that of the millions whose investments they manage?  Why do they continue to reinforce failure?

The second fundamental issue is the future of Britain’s prodigious research and design expertise.  In an address on February 1 to the Parliamentary Scientific Committee, the Prime Minister complained that too much of Britain’s scientific achievement benefited our competitors rather than our own industry.  The answer is you cannot transfer science and technology to an industry which is not there or is not prepared to absorb it.  The Rover sale takes out of British hands around £4,300 million of annual turnover in high technology products.  No conceivable expansion in the birthrate of new high tech companies can begin to replace the added value this turnover represents.  With the world awash with production capacity the key strategy in high technology industry is to spread your very expensive research and design over as many products as possible, retaining only inexpensive badge engineering to create market differentiation.

It is inconceivable that BMW will retain two research and design facilities, since their consolidation into one, centred in Bavaria, is the obvious way for BMW to recoup much of the cost of the purchase.  Of course this will not be noticed for some years by the general public, or even by the production workers, since the existing models will run for several years yet.  It is for this reason that BMW is able to give a continuity of employment guarantee to production workers.

But the loss of research and design autonomy will be felt immediately.  With the centre of design decision making being removed to Munich, discussion with British component suppliers about new developments will come rapidly to a halt as designers realize that for future models BMW will have their own views about component supply.  Inevitably young British graduate engineers will realize that promotion and prospects depend on fitting in with Munich not Birmingham.  There will be an enhanced flow of our ablest young people to Germany, ultimately to serve German, not British industry.

For our research scientists and engineers to make a useful contribution to our industries, they have to know what the objectives are – what the markets are likely to be.  It is this knowledge of the linkage between R & D and the market, which domestic ownership of the market and production provides in strategic sectors of industry.  The sale of Rover represents a massive reduction of that linking and therefore a massive opportunity loss in mechanical engineering as well as in plastics, electronics and metals.

Perhaps the most fundamental point of all is the devastating blow to our national morale and self-respect.  It is not true as some aver that the battle for the British car industry was lost in the 1970s.  This is the defeatest argument which has dominated British public life since Suez.  It is never too late to build a new industry if the will is there as the Japanese, the Koreans, and now the Malaysians are demonstrating.  Thirty years ago BMW was itself an ailing company, smaller than Jaguar is now.  Since then by keeping in the business a much higher proportion of profits than is usual in British industry and by dedicated expertise at the top, it has grown to its present position.  Growing a business in this way is in fact much more typical of German industry than of British industry where corporate managements tend to prefer the takeover of existing businesses as the easier route to growth.  It was entirely symptomatic of the malaise of British corporate management that the only engineer present at the news conference announcing BMW’s takeover of Rover was Mr Pischetsrieder, chairman of BMW.

No nation can survive on a diet of everlasting retreat and evacuation.  Our country desperately needs a victory in the intense industrial war which is fought out daily around the world.  There was no immediate need to sell Rover: the partnership with Honda, committed as they were to keeping Rover a British company, had many miles to go.  In round terms, the £100 billion bonanza from North Sea oil has financed the bulk of the huge British investments in largely non-strategic sectors of overseas economies.  Just two percent of this sum is all that is needed to save the strategically vital Rover for the British economy.  Instead the City and the BAe board have handed us another Dunkirk in order to obtain short-term financial relief.  When a system continues to deliver nonsense, the thing to do is to change it – not pretend that it works.  As Churchill said in 1940, “Wars are not won by evacuations”.

Professor Bush, formerly with ICI, holds the Chair of Polymer Engineering in Manchester and is Chairman of the North of England Plastics Processors’ Consortium.  He directs his own technology company and is a Fellow of the Institutions of Mechanical Engineers and of Chemical Engineers and of the Institute of Materials.

A paper written on 25th March 1993, but not originally for general publication. It is included here because it shows the author’s progress of thought on this subject and the time scale.

1          Change in Establishment View about Manufacture

Alarm about the state of British manufacturing has now gripped all but the most unreconstructed City circles, but the alarm is largely inchoate.  Barely five years ago political, financial and journalistic circles maintained almost to a man that a rapid decrease in manufacturing as a proportion of the gross domestic product was in some ways “natural”, even perhaps the hallmark of an advanced economy, where Britain would once again be pointing the world towards its future.  With a trade gap of £15-20 billion in prospect for the recession year of 1993, following on an accumulated deficit of over £30 billion from the previous two years, this proposition is exposed as the ridiculous viewpoint it always was.  In three years then, in the depths of a demand-based recession, the average British family unit has accumulated a foreign debt of around £2,500 or 15% of its annual income.  Before a remedy can be proposed it is necessary to analyse briefly why the proposition about the relative unimportance of manufacture is, and always was, so absurd, as this writer and a few, but very few, others have argued over the years.

2          The importance of Manufacture for Britain

Broadly any nation can make a living in the world from four natural resources – its land, its sea, minerals under the land or sea and its brains.  For a country with nearly 60 million people, living on about 60,000 square miles of reasonably habitable and cultivatable land above 50 degrees North, having only one significant mineral resource (oil), its brains will have to provide the bulk of its income.  Even a 50-100% tariff on food form tropical and subtropical regions of the world has not discouraged the population from importing a massive percentage, possibly 30%, of its food from these regions, while living and working for 48-50 weeks of the year above latitude 50^o North and subject to 30-100 inches of rain per annum will ensure a massive deficit on tourism.

Oil and gas extraction contribute around 2.5% to national income – a proportion which is likely to decline.  Oil and gas extraction in UK waters, and mineral extraction generally, pose a particular problem in another sense however and that is that the available price is set overwhelmingly in regions of the world where extraction is fundamentally easier, so that relatively small price shifts can close a large portion of the British industry down overnight.  The coal industry poses the present example, but world price reduction of $5 per barrel would threaten half of North Sea production.  There is no salvation, nor has there ever been salvation, in North Sea oil.

2.1       Britain’s dependence on brains

A major objective of national economic policy – as for any prudently managed business – must be to reduce the vulnerability of the nation’s economy to factors beyond its control even – and this is a key point – at some sacrifice of short-term advantages.  For this and the preceding reasons Britain is dependent on its brains and always will be for the vast bulk of its income.  Many will nod agreement and add “skills” but here it is worth recalling a phrase of King Alfred, written (in English) almost exactly 1100 years ago: “That which is done unthinkingly cannot be reckoned a skill”.

2.2       The Manufacturing Multipliers

The fundamental reason for the importance of manufacture in Britain’s economy is that via its enormous replicating ability it is overwhelmingly the vehicle for brains – German brains, Japanese brains, American brains – and potentially British brains.  It is for this reason that the overwhelming majority of traded products are and will continue to be manufactures.  Using data from the chemical, computing and aerospace industries certain ratios can be established which may be termed the manufacturing multipliers:

M₁:       One unit of design effort embodied in capital plant provides about 40 units of saleable product.

M₂:       One year of designer’s effort embodied in capital plant provides about 30 man-years of semi-skilled employment.

Contrary to received wisdom the values of M₁ and M₂ indicate that manufacture, in Britain’s geographical situation, is both the main engine of wealth and directly and indirectly will continue to be its main source of wealth creating employment.

Of course for M₁ and M₂ to apply at their maximum values capital must be forthcoming to embody the designers’ efforts – in a word his brains – and the capital must be managed efficiently.

2.3       The Principal Reason for British Failure in Manufacture

While much attention has for 20 years or more been focussed on labour productivity, there is abundant evidence that it is capital inefficiency in both senses – the embodiment of brains in the initial investment and the subsequent management of that investment – which is the most important factor distinguishing British manufacturing industry disadvantageously from its chief rivals.  Because funds available for reinvestment are particularly sensitive to capital efficiency, practically the whole of the shrinkage of British manufacture relative to its principal competitors can be attributed to this feature which is today the responsibility solely of corporate management. That there are baneful influences in Anglo-Saxon capitalism bearing down on British managements is indeed true, but will singular and outstanding exceptions, British corporate managements are composed of men whose mentality is that of traders – people who are happiest when buying other companies’ technology (i.e. their brains) and markets, using money borrowed from banks and shareholders – rather than applying themselves to the hard graft of thinking, analysing and developing their own technology and products.  While there are many examples to choose from, that of BMW is one of the most instructive.  Here is a company which 30 years ago was about the size Jaguar is today, whose subsequent organic growth to about half a million vehicles per annum owes nothing to City-type expertise, but everything to the services of a dedicated and determined management, schooled in the technology of car design and manufacture.

2.4       Scale of the Failure in Manufacturing

Overall the hard fact must be faced that by and large the leadership of British industry has in the last 30 years or so, with as I have said outstanding exceptions – pharmaceuticals and chemicals among them – been a gigantic failure.  It has allowed itself to be expelled from whole areas of manufacture – machine tools, printers, copiers, plastics machinery, instrumentation, electromechanical gear of all descriptions, heavy trucks, most domestic equipment, heave construction equipment and a whole host of everyday items.

To answer those who say market losses were inevitable, it is worth reflecting that if Britain had the same share of world manufacturing as France has (about 7%) it would have a trade surplus bigger than its current deficit and unemployment well below a million.  It is a significant commentary on political attitudes that reference is always made to Britain’s share of world manufacturing trade (about 8.5%), but it is total manufacturing that counts.

Because the source of failure on the current scale is attributable to the corporate management class, heavily influenced by the financial system, and because something so entrenched will neither be changed overnight, nor even be inclined to recognise its own failings, the best that can be expected from it over the next ten years or so is to hold on to Britain’s existing world manufacturing market share (4%).  Even this objective will require a major shift in attitudes among those presently in control.  The significance of Japanese investment is that it injects just the required change of attitude, but the injection is essentially that – a projection of Japanese corporate attitudes, not a change in British ones.  However at best this will, for the reasons given above, only keep Britain in permanent trading deficit – which will have to be paid for eventually by the gradual realisation of its overseas assets (basically the 1980s’ oil revenues) or the progressive sale of domestic assets (chiefly companies and real estate as found on the West Coast of the USA and Canada) or both.  Just as serious a consequence will be the institutionalising of massive (around 10%) unemployment (the present levels is about 15% of genuine jobs).

3          Radical Change

It is the view of this paper that such a prospect for a great country is not to be contemplated, that the threat to our survival as a nation is greater than any in our long history, and that being so, every current belief, shibboleth, alliance, relationship, commitment, practice, must be subjected to the stringent test: “Does it help or hinder us in our fight for industrial survival?” and if it hinder us, it must be discarded or bypassed.  Everything, but everything, must be subordinated to winning the industrial war.

3.1       A National Objective for Manufacturing Expansion

Wars are won by setting difficult but attainable objectives.  This paper proposes that over an eight year period manufacturing industry should be expanded by 35% net.  This would bring manufacturing’s direct share of GDP to about 30%, broadly the figure which applies to Germany.

This would add £50 billion to GDP directly and via the multiplier add another £50-100 billion in total.  It would require at current manufacturing technology, additional investment of around £120 billion, or about £15 billion per annum.  This corresponds to an approximate doubling of current levels of manufacturing investment.  It represents however a mere £500 per insured adult per annum and should be compared with the nearly £2,000 per insured adult per annum which Germany is paying (or rather not paying) for bringing former East Germany up to West German levels.

At current technologies the additional employment in manufacturing industry would be about 0.8 million, which merely replaces the loss in the last six years.  Further employment of 1-1.2 million would be created in the services supplying the new manufacturing industries, making 1.8-2.0 million all told.  In essence the main part of our chronic unemployment problem would be solved.

3.2       How the objective can be achieved

3.2.1    Human Resources

At current technologies and wage levels an investment of £15 billion per annum over eight years requires about 120,000 qualified people to design, construct and subsequently run it.  This is about half of the current membership of the major engineering institutions.  However only 50% of engineering graduates enter industry.  That is about 15,000 per year who do not.  Thus contrary to received opinion there is a vast pool of inexperienced, but qualified engineering professionals in the country, and it is probable that a disproportionate number of the ablest have entered accountancy and finance which at the end of the day create nothing.  In addition there are probably 100,000 qualified and experienced engineers in the prime of life, eking out a living as consultants, advisors to government quangos, reluctant teachers and refugees in the further and higher education sectors.  In addition the country is awash with unemployed time-served experienced mechanical craftsmen of all descriptions, many of them from defence-related industries under the threat of further large-scale closures and redundancies.  In short there is no lack of human resources for the envisaged expansion.

3.2.2    Creation of new firms from scratch

Just as in another emergency Kitchener raised his New Armies in 1915-16, so we must create a New Army of firms from scratch, using the human resources defined above.  Members of the existing corporate establishment (with outstanding exceptions) must not be, repeat not be part of this venture.  (The outstanding British (Australian actually) general of the First World War, John Monash, was an engineer by profession, and even Haig recognised that officers from the non-military field performed on average better than those from the traditional military caste.)

Taking the average manufacturing firm as having the following characteristics: £20 million capital, £20 million turnover, £10 million added value, a staff of 200 of which 10 are engineers and 10 other professionals, we need to create at this scale about 1,500 firms per annum.  Of course over time many of these will grow so the need to seed will reduce.

3.2.3    Market targets for the new firms

These should be based on a detailed expansion of the list given in 2.4 of the markets from which Britain has largely or entirely been expelled.  The business schools should be called on to donate 50% of their staff time to doing a real job of work, namely to producing, industry by industry, sector by sector, a market plan for British manufacturing firms at the £10 to £50 million per annum turnover level.  Before any firm is set up this essential staff work must be completed.  Included within this will be the need to define sales networks for both recapturing the home market and capturing overseas markets.  To support the national objective of £15 billion additional manufacturing product, approximately 5,000 man years of effort will be needed, but there is bags of resource for this – to be found not only in the business schools, but among the mass of technical research degree takers which have at best only peripheral scientific, let alone commercial, relevance.

3.2.4    Paradigm for the creation of new firms

The central enabling step is the establishment of several Manufacturing Institutes with a mission defined by broad categories of industry.  The unique feature would be both the scale – each would be responsible for about £1 billion of new output per annum – and the fact that they would be a combined business and teaching establishment.  They would have responsibility for launching the new firms.  Instead of doing artificial case studies, students – who would be qualified engineers and scientists of any age – would be the managers and directors of actual new firms, starting not at the one or two man scale, but at the 50-100 employee scale.  Each Institute would also be the home of a General Staff for its industry sector, assembling and commissioning the market plans referred to in 3.2.3.  This general staff would not be made up of failed members of the present corporate establishment, but would be staffed by people having two essential qualities: an absolute dedication to reconquering lost markets and the technical knowledge of the manufacturing processes to achieve this.

The leaders of the new firms would bid for a given market segment on the basis of their personal qualities, not their access to finance, which would come through the Institutes.  They would be paid a good salary together with shares, which if the firm reached the £10 million per annum added value, would make them paper millionaires.  Restrictions on selling out would be imposed.  Mistakes would be made, but the release of youthful energy targeted by the experience and dedication of older people would rejuvenate the whole nation.

3.2.5    Where would the cash come from?

We are talking of £500 per annum per insured person, about the sum spent on foreign holidays, about two thirds of that currently spent on support of the unemployed.  If implemented, this plan would make the DTI and regional aid largely redundant, releasing about one third of the required cash.  My proposal is that the money should come initially from a combination of %0% savings on the DTI/regional aid and a savings levy in the form of industrial credits – at the rate of one penny on basic tax rates, five pence on higher rates, the restoration of a new 60% top rate, plus 50% on merchant bank profits – which could be encashed at some future date.  This would give the general public a stake in the success of the plan.  Individuals could nominate which manufacturing institute they preferred – machine tools, plastics machinery, textiles – whatever.  Because the focus would be initially at least on conquering the lost home market, credit holders would have a built-in incentive to buy British and to know precisely where to address their complaints if the quality were not good enough – but it will be; I have no doubt of that.

A letter to the Daily Telegraph which was published on 29th January 1993.

Your report that Britain is being pressed to give up its permanent seat and veto on the UN Security Council needs a more robust response than your editorial (Jan. 27th).

If the level of current financial contributions were to be the criterion for membership, then both Russia and China would have to give up their seats before Britain did; the former because it has no foreign exchange to pay its $230 million assessment, the latter because it pays less than Spain or the Netherlands.

It would, however, be sensible and prudent for Britain to increase its contribution by the relatively paltry sum of £30 million and to act more conspicuously on behalf of the Commonwealth, to which it owed a great deal at the UN during the Falklands crisis.

At the same time, President Clinton should be reminded that it is not just cash to support a bloated UN bureacracy that matters, but a record of long-term willingness and ability to act physically in support of UN objectives.  In this respect, Britain’s record, from Korea to Bosnia, is second only to that of the United States.  Germany and Japan need to work their passage before making claims.

France and China were not victors in the Second World War as you state: they were the two principal defeated Allied countries, whose liberation was due to the victories of the other three permanent members of the Security Council.  Stalin recognised this and opposed their membership of the Security Council for that very reason.

A letter to the City Editor of the Sunday Telegraph which was published on 21st June 1992.

In his perceptive “Working Brief” (June 14th) on the differences between Anglo-Saxon and Japanese-German capitalism, Tom Lloyd points to the puzzle which the success of the latter poses for the supply-side economists.  This puzzle arises because of the persistent failure of most economists to attach anything like their true weight to two ingredients of an economy besides the common ones of capital and labour.  The two missing ingredients are (a) technology and (b) the competence of the boards of companies in directing the other three ingredients.

Robert Solow (Nobel Prize 1987) has analysed in careful detail the respective contributions of capital, labour and technology to real economic growth in the United States over 40 years to 1969.  He found the ratio of contributions to be about 20:20:60.

With notable exceptions major British companies are dominated by men whose mentality and expertise, if it can be called that, are largely those of traders, who are happiest when engaged in acquiring other companies’ products and markets with borrowed cash, rather than applying themselves to the hard task of thinking and analysing how their own products and processes can be improved.  No effort is spared, on the other hand, in devising reward systems whose effect is to confer scandalously high chunks of wealth on themselves.  The chairman of Nippon Telephones, which has twice the turnover of BT, receives about a third of the pay of the BT chairman.

For the most part growth in real wealth comes from the tangible products.  Banking, financial services and the like have grown from the provision of essentially a simple service into being elaborate ways of spreading the wealth around, usually to the vast benefit of those doing the spreading.  Until Solow’s conclusion is properly understood and acted on, British industry will continue to lose ground, not just to Germany and Japan, but to Korea, Taiwan and beyond, no matter how free the capital markets are.

In 30 years, BMW, whose products are so popular with City types, has grown from a company smaller than Jaguar today, without any expensive City expertise, but with instead the dedicated input of retained capital, technology and hard work from the top.  It is technological capital, not cash capital, that is the most important ingredient of capitalism – and always has been.  That is the solution to the economists’ puzzle.

A letter to the Editor of the Daily Telegraph which was published on 5th June 1992.

While those few of us who have fought for years against the loss of British self-government to the EC welcome all converts to our cause, it is a pity that the majority of those 100 or so Tory MPs signing the motion welcoming Denmark’s decision to veto the Maastricht Treaty did not find the courage to vote aginst the second reading of the Maastricht Bill last week.

The Prime Minister’s absurd decision to press on with ratification is additional evidence, if any were needed, that Euroism is more to do with politicians’ job opportunities than those of our young people, 800,000 of whom are out of work.

Europe, in fact, has become both the reason and the excuse for doing nothing about the related and endemic problems of unemployment, the shrinkage of our manufacturing industry and our mounting trade deficit.

To solve these problems needs, among other things, heavy concentration on those markets of the world which are growing rapidly – and these happen to be mainly on the Pacific rim where the majority of the world’s manufacturing capacity is situated.

This is not to neglect European markets, but to recognise that the major expansion of Britain’s trade there has already taken place. The fastest rate of expansion of British exports to a major economy in the last few years has, in fact, been to Japan.

Such a refocusing of Britain’s priorities should include the Commonwealth. Here Britain, with its unique ties of kinship and history, has an opportunity to influence that important section of the Third World which we know most about towards an effective relationship with the First – the necessity of which the Rio Conference demonstrates.

A letter to the Daily Telegraph which was published on 4th February 1992.

Charles Moore is right (article, Jan. 31st).  There is something rotten in the State of the Union, and that is the corrosive defeatism which has gripped most of the British political class since Suez.  To this defeatism must be added the automatic denigration of our country by the majority of journalists and other members of the chattering classes who gullibly reproduce any claim about the superiority of continental countries.

Dirk Bogarde’s review of two books on Germany (Weekend, Feb. 1st) is a case in point.  Beside his fantasies about the three-language abilities of ordinary Germans is the matching remark about our “impoverished, rather smug island”.

According to the OECD, the real disposable incomes per head in Britain, Germany (before unification), France and Japan are only trivially different when calculated in purchasing power parities.  Last year a German study revealed that of the best 50 companies in Europe, 27 were British, while the value of the top 500 companies quoted on the London Stock Exchange is greater than those of Frankfurt and Paris combined.  Britain’s net overseas assets (at around £130 billion) are the greatest of any country in the world (including Japan).

Yet these facts about our real strength do not prevent George Jones, for instance, referring to Britain’s “declining economic influence” (Jan. 31st) when discussing pressure brought by the Germans and Japanese on Britain to give up its UN Security Council seat.

The increased pressure for the separation of Scotland from the Union is a predictable consequence of Britain’s insane policy of surrendering her independence to the European Cmmunity – itself a direct consequence of post-Suez defeatism.

To paraphrase Ludendorff’s supposed remark about the British Army, we have become a lion of a country ruled by ninnies, and nobody wants to be part of that when there is an alternative.  Whichever party announced it was reclaiming Britain’s independence and would not ratify the Maastricht surrender would both win the next election and save the Union.