Anyone putting forward the argument that UK/US may be more resilient to a downturn normally faces the default statement that the UK/US doesn’t manufacture anything and will therefore face a greater decline. Service industries are assumed to be just hairdressers, fast food workers, interior designers, etc...

From my own experiences in the telecommunication industry, I believe the opposite may be true. Development and manufacturing are the both the most costly and variable aspects of the business process. When hard times are hit, the greater proportion of budget cuts are always targeted at development and manufacturing first. By off-shoring and outsourcing, the most significant and variable costs of a company are placed on the balance sheet of a foreign nation. “Higher functions”, such as senior and middle management, research, design and marketing, which tend to be retained in the home country, are impacted to a much smaller proportion. Once the company starts slicing into these functions, its core is damaged and with it, so is the ability of the company to recover. Often, by using outsourced manufacturing and development, negative spiral costs associated with downsizing can be entirely avoided.

In addition, the UK/US will benefit from a return to geo-localized manufacturing, as the increased price of oil make it uneconomic to transport goods across the globe. Where energy costs are involved, the process of globalization can reverse just as quickly as it began. A lower pound/dollar and high oil will see a return of significant amounts of manufacturing. I also think based on this hypothesis; China could suffer a much greater impact – one that could really shake the structure of their society.

Thanks for bringing this topic up,

I am of the belief that since the UK doesn't really manufacture anything it is going to be harder to bail ourselves out. I can't really follow the thinking through on why I believe this, its probably an opinion i've borrowed off of someone else At least, one way of looking at it may be 'When we need loads of cash, what can the UK produce that everyone else will want?'

If you were to ask 'What does the UK do at the moment?' in the sense of what makes us a "prosperous" country to live in, then the answer would probably be financial services (if anyone knows of other things the UK does well please reply!). If this is true, and with financial services failing globally then we are probably in alot more trouble.

Im not sure I entirely agree with the statement that the US doesn't manufacture anything, at compared to the UK they have loads of things, Caterpillar, Boeing, Intel, Ford (ok they aren't doing so well!), Intel, there are loads more. UK? Dyson? erm, ok there are probably lots of good corporations to list here, but not many spring to mind quickly! anyone?

If you take the worldbank debt statistics, then I *think* the UK has more debt per person than any other country in the world. Combine this with the falling pound and that makes double the fun.. It would be great to hear if anyone knows whether this statement is accurate or not.

So in the post-credit-crunch world, what could the UK offer that everyone else would want? It wouldn't be natural resources, perhaps not financial services for a while.. (that is if its the same kind of financial services that got us into this mess!) Lots of good land to produce food stuffs with.

One of the next big markets could be in science and genetic engineering, I think Korea and Singapore are doing well to be on the forefront of this.

Another interesting aspect is looking at well established manufacturing based economies such as Japan, they aren't doing so well when there's no-one to sell manufactured goods to..

Your comment about energy costs and negative globalisation makes for some very interesting pondering!

That much i can agree with, a brand i am familar with has already seen major strength and higher margin as international competition can no longer afford to compete in the u.k market.