:00:13. > :00:17.A world financial crisis we hoped we would never see again. 80 years
:00:17. > :00:25.on, are we facing another depression that could last for
:00:25. > :00:30.years? Riots, internal dissent and fracture, those are things that you
:00:30. > :00:37.would expect to come with this. The euro crisis deepens. Ties with
:00:37. > :00:44.old allies are strained. Deep divisions. Britain out on its own.
:00:44. > :00:50.What is on offer isn't in Britain's interests... We live in historic
:00:50. > :00:58.times. There's huge questions surface about our relationship with
:00:58. > :01:03.Europe and at home lives and familiar iz to support. I have a
:01:04. > :01:09.roof to keep over my head. Is there a new route to prosperity? New
:01:09. > :01:12.markets to be exploited? New job to be created? If British businesses
:01:12. > :01:16.don't follow the markets abroad, they're going to miss out. They may
:01:16. > :01:21.be difference between thriving and surviving or even dying.
:01:21. > :01:31.As storm clouds gather, tonight we investigate what we must do to
:01:31. > :01:39.
:01:39. > :01:44.There's been a lot of talk of how bad things are - talk of recession,
:01:44. > :01:49.depression and now, isolation from Europe. There's been less talk on
:01:49. > :01:53.how to solve the problems. So, I'm going ton a mission to discover how
:01:53. > :01:59.we can steer the economy through these troubled times. It's not
:01:59. > :02:09.going to be easy, but the outcome will affect us all.
:02:09. > :02:10.
:02:10. > :02:14.You may find my starting place surprising. A primary school in
:02:14. > :02:21.London. We're going through the biggest squeeze on living standards
:02:21. > :02:31.for decades. There's talk of a lost generation. But here, they're
:02:31. > :02:32.
:02:32. > :02:37.trying to fight the gloom. They're preparing the children for a
:02:37. > :02:42.different kind of future. You don't have to be brilliant to realise
:02:42. > :02:47.that Europe's in a mess and that the growing, emerging economies are
:02:47. > :02:56.not European economies. Therefore it seemed ill advised to focus
:02:56. > :03:00.one's modern foreign language teaching solely on Europe. Their
:03:00. > :03:05.teachers want them to learn a Chinese language, spoken by over a
:03:05. > :03:12.billion people, a people whose economy and culture will
:03:12. > :03:16.increasingly dominate our lives. China is a rising power. It's
:03:16. > :03:20.courteous, apart from anything else, if you're doing business with a
:03:20. > :03:24.power, to greet and speak to people in Mandarin. It needs to be taught
:03:24. > :03:28.regularly and consistently throughout a child's school life,
:03:28. > :03:34.starting in reception. Difficult challenge. Difficult, though it is,
:03:34. > :03:44.it's a challenge worth taking on. It could be essential if future
:03:44. > :03:54.
:03:54. > :03:59.British generations are to benefit We can't just look at schools for
:03:59. > :04:04.solutions. We need to look in the work place as well. Calculating
:04:05. > :04:14.your route. So I'm taking a journey to the heartland of British
:04:15. > :04:24.
:04:24. > :04:33.This is what Britain used to do well. Manufacturing was the engine
:04:33. > :04:37.of the nation's economic growth. This train was built here in Derby
:04:37. > :04:42.in 1956, but in fact, the relationship between industry and
:04:42. > :04:47.rail in Derby goes back further than that, to the 1800s. They still
:04:48. > :04:57.make trains here and a lot of people are fighting hard to ensure
:04:58. > :05:05.
:05:05. > :05:12.that rail is an industry here, not just a tourist attraction.
:05:12. > :05:16.Manufacturing is still at the heart of the economy in the Midlands.
:05:16. > :05:21.Bombardier's factory in Derby plays a big part in the local economy.
:05:21. > :05:26.This is where they make the trains for London Underground.
:05:26. > :05:34.And for some of the biggest main line rail operators in the country.
:05:34. > :05:44.It's also the last train Paul Smith is one of the 3,000
:05:44. > :05:46.
:05:46. > :05:50.people who still work here. You're going to take Stuart with you.
:05:50. > :06:00.I like everything about the job. It's really demanding, challenging
:06:00. > :06:01.
:06:01. > :06:06.and it really pushes you to try and achieve. Back in March, the Cabinet
:06:06. > :06:12.came to Derby, manufacturing, they declared, was once again going to
:06:12. > :06:17.be our path to prosperity. Derby is a great example of what the British
:06:17. > :06:20.economy should be in the future, which is, a series of manufacturing
:06:20. > :06:26.business that's export around the world. Those comments raised huge
:06:26. > :06:33.hopes amongst the 3,000 workers at Bombardier. But the news which came
:06:33. > :06:38.out just weeks later meant their joy was short lived.
:06:38. > :06:41.This morning's dawn didn't bring warmth for the workers of
:06:42. > :06:45.Bombardier. The Government awarded a massive contract to build new
:06:45. > :06:53.trains for the Thameslink route not to Bombardier in Derby, but to
:06:53. > :06:58.Siemens in Germany. I think it's disgraceful. I just
:06:58. > :07:01.cannot understand how they can justify spending �1.4 billion of
:07:01. > :07:09.British taxpayers money to boost the German economy. I just can't
:07:09. > :07:16.understand that. After losing the contract, 1400 jobs are going at
:07:16. > :07:19.this factory. Paul Smith has just been told his job is one of them.
:07:19. > :07:23.Emotionally it's draining and I feel awful. I'm still shaking and
:07:23. > :07:26.what not. I've got a family to support. What was it like going
:07:26. > :07:30.home and telling your wife that? Horrendous. All sorts of thoughts
:07:30. > :07:36.were going through my mind. What am I going to do next? What future
:07:36. > :07:44.have I got? I might end up losing my house or all those kind of
:07:44. > :07:48.things. It's almost like they're shutting down Britain.
:07:48. > :07:55.Manufacturing matters? Big time, yeah. Do you think the politicians
:07:55. > :08:05.understand that? No. Not at all. The Government said it had no
:08:05. > :08:09.
:08:09. > :08:14.choice. It had to get best value But giving the German economy a
:08:14. > :08:24.helping hand might seem strange. Germany will now be making our new
:08:24. > :08:28.
:08:28. > :08:33.trains. Of course, they already The Mini for instance is a brand
:08:33. > :08:43.that Britain invented. Now the cars are still manufactured here, but
:08:43. > :08:45.
:08:45. > :08:51.the company which makes them is BMW of Germany. Britain seems to have
:08:51. > :08:58.lost control of its manufacturing industry. Manufacturing used to be
:08:58. > :09:04.a third of our economy. Now it's slumped to about a tenth. In its
:09:04. > :09:08.place, newer, flashier, younger feeling businesses took over. We no
:09:08. > :09:13.longer had to manufacture, the argument went, instead we turned to
:09:13. > :09:22.the City to provide the nation's wealth and all went well, for a
:09:22. > :09:31.while. But the credit crunch and recession destroyed much of that
:09:31. > :09:35.dream. Just how serious the crash has been for our economy was made
:09:35. > :09:40.clear by last month's gloomy economic forecasts. It painted a
:09:40. > :09:46.picture of an economy which, far from bouncing back, was actually on
:09:46. > :09:50.the edge of another recession. And that's why the debate about
:09:50. > :09:57.manufacturing and the make up of our economy is centre stage once
:09:57. > :10:04.again. I don't think we can exist just from the City. I don't think
:10:04. > :10:06.you can exist just with services. I don't think you can exist just
:10:06. > :10:11.flipping hamburgers. Manufacturing employs people and could employ
:10:11. > :10:20.more people. It used to employ 6.5 million people. Now it's barely two
:10:20. > :10:25.million. Ironically, to create new economic
:10:25. > :10:31.growth, we may have to return to an older economic model, one in which
:10:31. > :10:38.we actually make a lot more things. Turn left in 100 yards.
:10:38. > :10:43.Manufacturing was our past. Could it also be a future destination?
:10:43. > :10:48.The fortunes of this company echo the rise and fall of Britain's
:10:48. > :10:55.manufacturing industry. When our industry led the world, this was
:10:55. > :11:05.one of the most successful products of its kind. Made in Britain still
:11:05. > :11:08.sells. I'm at one of the most famous parts of Derby's industrial
:11:08. > :11:11.history, Royal Crown Derby. They've been making pottery here for about
:11:11. > :11:15.260 years. They made it for the Titanic. They made the most
:11:15. > :11:20.expensive plate ever in the world. They are about to make a new range,
:11:20. > :11:30.and I'm going to help them. This is Tim my instructor. Hi. Right, where
:11:30. > :11:34.
:11:34. > :11:38.do we start? This may look simple, but not for me. To survive in a
:11:38. > :11:43.world dominated by cheaper labour in the Far East, British
:11:43. > :11:52.manufacturers have had to go up market. Oh, my word, that looks
:11:52. > :12:01.like it's my work. The buzz word is quality, no cheap crockery here.
:12:02. > :12:08.It's a plate! Everybody! It's my plate. And this is where the
:12:08. > :12:14.process all ends, as the plate comes out of the kiln. If this
:12:14. > :12:20.doesn't save British industry, I don't know what will. For the local
:12:20. > :12:26.MP, protecting manufacturing is no laughing matter. I do genuinely
:12:26. > :12:30.believe that manufacturing has a vitally important role to play in
:12:30. > :12:33.the recovery of the UK economy, by putting all our eggs in the
:12:33. > :12:38.financial services basket, it meant when the crash arrived, the
:12:38. > :12:41.resilience of the country was severely impaired. As a consequence,
:12:42. > :12:51.we've suffered much more severely than other countries, like Germany,
:12:52. > :13:01.
:13:01. > :13:11.for example, that continued to A few miles away is JCB, a genuine
:13:11. > :13:12.
:13:12. > :13:16.British manufacturing success story. It employs 10,000 people. These are
:13:16. > :13:21.JCB backhoe loaders. That's a digger, to you and me. From here at
:13:21. > :13:25.their base in Staffordshire, they're exported throughout the
:13:25. > :13:28.worldment Three quarters of all JCB's machines are sold abroad.
:13:28. > :13:34.They sell to 150 countries. They're the most popular diggers of their
:13:35. > :13:42.kind in the worldment For JCB, it's all about exports.
:13:42. > :13:47.So should we rebuild our economy like JCB has built its business?
:13:47. > :13:54.wend to India 30 years ago. We used to tell 50 machines a year. Then
:13:54. > :13:59.100 machines a year. Last year we did I think 27,000 machines in
:13:59. > :14:09.India. Now, really the whole world is our market, and particularly Far
:14:09. > :14:17.
:14:17. > :14:26.Unlike JCB, almost half of British exports go to Europe. And Europe,
:14:26. > :14:31.of course, is in deep crisis. Europe today: crippled by debt.
:14:31. > :14:39.Riots on the streets. British taxpayers, on the hook for billions
:14:39. > :14:43.of pounds of loans and guarantees, just to help bail out the euro. The
:14:43. > :14:49.troubles in the eurozone are also stifling its economic growth, and
:14:49. > :14:57.that is bad news for our companies, tried to sell their goods to a
:14:57. > :15:02.recession hit Continent. Welcome to my world. This is where we make
:15:02. > :15:06.structured steel for projects all around the UK. Sid Pepper has been
:15:06. > :15:10.in the steel industry for over 40 years. Like many sports businesses
:15:10. > :15:15.in Britain, he has suffered first and from the ongoing crisis in
:15:16. > :15:19.Europe -- many small businesses. The biggest beer is the uncertainty
:15:19. > :15:23.has the potential to cause serious problems for small companies like
:15:23. > :15:27.myself. A lot of work in the UK is carried out by companies owned and
:15:27. > :15:32.run from Europe. They are being cautious, putting a hold on
:15:32. > :15:38.projects. I employ a these guys this week, will they get a wage
:15:38. > :15:42.packet at the end of the week? It is as fundamental as that.
:15:42. > :15:45.believes it is political ineptitude that is damaging British Business.
:15:45. > :15:50.While they are messing around in Europe, we have to continue. I wish
:15:50. > :16:00.they would get it sorted because we are going to be limited, I can only
:16:00. > :16:01.
:16:01. > :16:06.keep pushing the boundaries a Just four days ago, European
:16:06. > :16:12.leaders met. Desperate to save its the euro, 26 countries agreed to
:16:12. > :16:16.try to strengthen their ties. David Cameron refused to sign Britain up.
:16:16. > :16:23.Saying it would stop our ability to defend our financial services
:16:23. > :16:27.industry. What is Owen offer isn't in Britain's interests, so I did
:16:27. > :16:30.not agree to it -- what is on offer. Critics in the coalition claimed
:16:30. > :16:36.that position has isolated Britain and undermined our relationship
:16:36. > :16:41.with our biggest export markets. am bitterly disappointed by the
:16:41. > :16:44.outcome. I think there is a real danger that over time, the United
:16:44. > :16:48.Kingdom will be isolated and marginalised within the European
:16:49. > :16:53.Union. We are going to be now excluded from key economic
:16:53. > :16:56.decisions that will affect our country in the future. Clearly a
:16:56. > :17:00.manufacturing company further north in England will think first about
:17:00. > :17:05.the single market. We don't want to be marginalised from that single
:17:05. > :17:10.market. That is not a risk we are running, claims the government.
:17:10. > :17:15.are still members of the European Union, we have access to the single
:17:15. > :17:19.market. But the deal that was offered to David Cameron in the
:17:19. > :17:23.early hours of Friday morning was one that was not in our national
:17:23. > :17:27.interest, didn't protect our interests. Therefore, the Prime
:17:27. > :17:33.Minister was absolutely right to say he wouldn't sign up to it.
:17:33. > :17:38.may be right, people may even agree with you, but surely, there is a
:17:38. > :17:42.cost to damaging that relationship? The fact is that we do trade a lot
:17:42. > :17:46.with European Union, but that is individual businesses and customers
:17:46. > :17:50.trading with individual businesses and customers elsewhere. We want
:17:50. > :17:55.access to European markets and it is right that European businesses
:17:55. > :17:59.have access to our markets, and that will continue. The markets
:17:59. > :18:03.remained worried. Indeed, many in the financial world think that at
:18:03. > :18:07.best, Europe is tying itself in two years of austerity. At worst, the
:18:07. > :18:13.euro could collapse. It cannot sustain itself. It is not
:18:13. > :18:17.competitive, it can't pay its debt off. Whether it is the periphery
:18:17. > :18:20.going first or the core knocking the periphery out, it is inevitable
:18:20. > :18:24.that it will collapse. The politicians are buying time. There
:18:24. > :18:30.is nothing you can do unless you create proper growth to move
:18:30. > :18:40.yourself out of this type of crisis. You think the euro and the EU as an
:18:40. > :18:40.
:18:40. > :18:45.institution will end? Absolutely. Some believe a collapse of the euro
:18:45. > :18:50.will cost Britain billions. If Europe declines, we will have to
:18:50. > :19:00.look for new opportunities further afield. Please find alternative
:19:00. > :19:04.This is picture-postcard England. Rolling hills, babbling brooks, a
:19:04. > :19:12.church spire and a Downton Abbey style manor house at the heart of
:19:12. > :19:19.the village. But this most English of settings is the backdrop for a
:19:19. > :19:23.photo-shoot with a twist. The internet children's clothing
:19:23. > :19:30.company, miniwardrobe.com, is preparing to unveil its latest
:19:30. > :19:37.collection. We are looking to market these products beyond the
:19:37. > :19:40.British consumer, to consumers overseas. We are taking British
:19:40. > :19:45.products, in Britain, and making them appealing to customers all
:19:45. > :19:50.over the world. It is no coincidence that this business has
:19:50. > :19:55.chosen an international look for its models. These children
:19:55. > :20:01.represent exactly the new emerging markets, that the company wants to
:20:01. > :20:04.export to. British businesses don't follow those markets abroad, then
:20:04. > :20:08.they are going to miss out. They may be the difference between
:20:08. > :20:18.thriving and surviving, or even dying in this climate. You have got
:20:18. > :20:23.to be out there. 1, 2, 3! What could feel this company's growth,
:20:23. > :20:26.and power Britain back to prosperity, is a business idea
:20:26. > :20:36.based on the biggest global social change that has happened in
:20:36. > :20:40.
:20:40. > :20:44.We think we are probably less than a quarter of the way through the
:20:44. > :20:54.most remarkable growth of middle classes on a global basis that the
:20:54. > :21:02.
:21:02. > :21:06.world will have seen for certainly, Will be 3 billion people in the
:21:06. > :21:11.global middle class. This is extraordinary. These extraordinary
:21:11. > :21:17.places are collectively known as the BRIC countries. Short for
:21:17. > :21:22.Brazil, Russia, India, and of course, China. I experienced this
:21:22. > :21:26.incredible growth first and when I was recently in China. Hundreds of
:21:26. > :21:31.millions of potential new middle- class customers, for Britain's
:21:31. > :21:35.ailing economy. Over the next decade, their likely growth will be
:21:35. > :21:40.about the same as another one of them today, so another 13 trillion.
:21:40. > :21:46.That will be close, if not more than double, the likely
:21:46. > :21:52.contribution to global GDP, double of the US and Europe put together.
:21:53. > :22:00.China is a very large market for European brands, including clothes,
:22:00. > :22:06.fashion products, watches, automobiles. China is the second
:22:06. > :22:15.largest market for BMW, for Audi, for Mercedes. So, the gold rush is
:22:15. > :22:20.on. But if we are going to win here in China, are we doing enough?
:22:21. > :22:26.Germany now exports more to the BRICs than to France. In the UK, if
:22:26. > :22:30.you add all of the BRICs together, we export about the same to them as
:22:30. > :22:34.we did to Ireland, and that is not our most important export market.
:22:34. > :22:39.Earlier this year, the Chinese premier came to the UK. We thought
:22:39. > :22:44.we had done well, getting around �1.5 billion worth of deals. Only
:22:44. > :22:49.the next day, he went to Germany, and they announced almost �10
:22:49. > :22:53.billion worth of deals. It made our attempts at breaking into this
:22:54. > :22:59.market look feeble. China, Brazil, India, these are countries which
:22:59. > :23:02.are growing and investing. If we have lost years of high
:23:02. > :23:07.unemployment and no investment now, if we lose the race to the new
:23:07. > :23:11.technologies, to the new industries, we will never, ever catch up again.
:23:11. > :23:14.That is why I think it is so important to act now, to get our
:23:14. > :23:18.economy moving, to get businesses confident, to start investing where
:23:18. > :23:22.the new jobs are going to come from. For a long time there has been a
:23:22. > :23:30.bit of a missed opportunity, we haven't been exporting as much to
:23:30. > :23:36.the likes of India and China as we might have done. Steering our
:23:36. > :23:41.economy to wards the newer growth societies is going to take time. --
:23:41. > :23:47.to wards. Time we don't have. So in addition to the long-term strategy,
:23:47. > :23:53.we also need a quick fix. In the past, we have turned to the
:23:53. > :23:57.government to spend mac got way out of recession. -- to spend our way
:23:57. > :24:04.out of recession. It is hoped major infrastructure projects like this
:24:04. > :24:07.will provide a major boost to the economy. This is the King's Cross
:24:07. > :24:13.station in London and they are ploughing some �400 million into
:24:13. > :24:18.the side. This project is fully publicly funded, signed off in
:24:18. > :24:23.times of plenty. We no longer have that kind of money. Our budget
:24:23. > :24:27.deficit is the second largest in the EU. So rather than spending our
:24:27. > :24:31.way out of trouble, the government is taking the axe to public
:24:31. > :24:39.spending. But by cutting too much, are they undermining hopes of a
:24:39. > :24:43.quick recovery? In the 19th century, 18th century, doctors' fault if you
:24:43. > :24:47.cut patient and let them lead, that would make them better -- doctors
:24:47. > :24:52.thought. It was quite medicine. This government still thinks more
:24:52. > :24:55.cuts and more bleeding will make things better. This economy needs a
:24:55. > :24:59.tonic, an antibiotic, they need a lift and then a long-term plan to
:24:59. > :25:06.get the patient fit and healthy again. We have just got cuts, cuts,
:25:06. > :25:09.cuts. I think the risk if we ignore our deficit, if we say, we can keep
:25:09. > :25:13.on borrowing in the way that we were, are enormous. The easy thing
:25:13. > :25:17.might be to pretend we don't have a problem. We do have a problem with
:25:17. > :25:24.the deficit but if we can address it, we will see strong growth in
:25:24. > :25:29.the future. It is 12 days to Christmas, and despite the attempts
:25:29. > :25:34.at cheer, the tough times are taking a real toll. In Derby, Paul
:25:34. > :25:42.Smith and his son are out Christmas shopping. He is facing a new year
:25:42. > :25:46.without work. We have had to tighten our belts, because of not
:25:46. > :25:50.knowing the future events. We can't go out and spend as much as we
:25:50. > :25:54.would do at a normal Christmas, because of what is happening. I am
:25:54. > :25:58.extremely angry, unbelievably let down. I feel I have still got the
:25:58. > :26:06.hell of a lot to give, I have 30 years left to give to the system. I
:26:06. > :26:10.have always worked. Incredibly For Paul, and people like him, the
:26:10. > :26:16.economy needs a quick solution. But it takes time to develop new
:26:16. > :26:21.markets. It takes time to pay back our debt. So some experts are
:26:22. > :26:25.calling for a more radical package now, to kick-start growth. Wouldn't
:26:25. > :26:29.it be great if very small businesses paid no tax at all on
:26:29. > :26:34.their profits to a certain level? And up to another level, assuming
:26:34. > :26:39.they are growing, they can pay only 10% or something. You can also
:26:39. > :26:43.bring in quite large tax cuts for lower-paid workers. That includes
:26:43. > :26:47.the consumption tax. You can cut VAT very heavily if you want to
:26:47. > :26:51.have an effect. How much would you suggest? 1% or 2% doesn't have an
:26:51. > :26:58.effect. I think you would have to make a 10% cut if you really wanted
:26:58. > :27:01.people to start spending. government says the economy can't
:27:01. > :27:10.afford tax cuts. Nothing is more important than getting the deficit
:27:10. > :27:15.down. If we don't take those difficult decisions, if we don't
:27:15. > :27:21.have credibility in our fiscal plans, then in the long term, we
:27:21. > :27:24.leave ourselves in a very dangerous position. NTS, there are times when
:27:24. > :27:34.governments will be unpopular -- and yes. The important thing is
:27:34. > :27:35.
:27:35. > :27:42.that we do the right thing for the Preparing our children for a
:27:42. > :27:46.different economic future is a big step. To grow, some say we are
:27:46. > :27:52.going to need to rebalance our economy, and find new markets
:27:52. > :27:55.abroad. We face an absolutely defining crisis, and you can stick
:27:55. > :28:00.your head in the sand and rock bottom in the air and think it
:28:00. > :28:03.isn't there, but we are in it. don't think that as a population,
:28:03. > :28:07.we have really grasped our problem. There is something wrong with our
:28:07. > :28:11.economy, that it is very badly balanced and is in the wrong place,
:28:11. > :28:18.that we need to do something dramatic to move it into the right
:28:18. > :28:24.place. That place is not familiar. Getting there won't be easy. We
:28:24. > :28:34.will have to make some big decisions if we are to secure our
:28:34. > :28:36.