Yesterday, The Slog interrogated data about the private productive side of the recovering economy. The general conclusion was that this sector of the economy isn’t recovering very much at all; in fact if anything, it’s shrinking. The Department of Business remained silent on the subject all day, it’s Peer-in-Charge being too busy declaring the Election formally ‘on’.

Later yesterday, in another briefing, the ONS blithely announced that the UK economy is now 75% dependent on service industries, of which the bulk are financial services. It won’t surprise readers to know that when it comes to financial services expertise, the once widely admired UK is now thought of as (to quote a Californian trader I spoke to last year) “a basket case”. Our position as a financial centre is in turn being eroded – first by rival bourses in Europe; and second, by the new portability of trading thanks to virtual platforms.

So to sum up, roughly half Britain’s GDP is in one business where our reputation is shot, and that business is under threat from both the EU and technological advance. But it doesn’t end there: because financial services are also very high margin. Today the ONS update on company profitability was released, and it confirms this by showing that UK service company net returns last year were 14.5%. Manufacturing, by contrast, was way down at 8.3%. Things we manufacture, you see, are not very desirable abroad (because our marketing and product design are poor) so we can’t command the margins. We can’t even get much market share: despite a weak Pound for most of last year, we lost share of business in almost every national overseas market.

So, summing up still further, the core business is not only shot, the small other bit is low margin and losing share. It’s not much of an outlook is it? Well hang on to your suicide pills, because it gets worse: the margins we’ve got are also eroding over time. The average margin across all UK business in 2008 was 14.1%. In 2009, it was 11.9%. Year on year, let me tell you, that is some drop.

“Don’t talk Britain down” says Lord Mandelson….the same man who, last year, swore blind that financial services “contribute no more than 28% to our GDP”.

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