The UK exchange rate rose by about 60% between the late 1970s and early 1980s and then, having roughly stabilised until the late 1990s, rose again very substantially as we moved into the 2000s. By contrast, the Chinese succeeded in devaluing the renminbi by about 75% between the start of the 1980s and the mid-1990s, leaving an enormous gap between production costs in China and the UK.
Is it any wonder that UK manufacturing as a percentage of GDP fell from 32% in 1970 to barely 10% now, leaving unable to pay our way in the world? Incidentally, I should point out that there is an element of arbitrariness and guesswork about the exact 1985 cross over point but the trends are absolutely unmistakable.
Source John Mills
