How to Survive the Meltdown Panorama

A world financial crisis we hoped we would never see again. 80 years

on, are we facing another depression that could last for

years? Riots, internal dissent and fracture, those are things that you

would expect to come with this. The euro crisis deepens. Ties with

old allies are strained. Deep divisions. Britain out on its own.

What is on offer isn't in Britain's interests... We live in historic

times. There's huge questions surface about our relationship with

Europe and at home lives and familiar iz to support. I have a

roof to keep over my head. Is there a new route to prosperity? New

markets to be exploited? New job to be created? If British businesses

don't follow the markets abroad, they're going to miss out. They may

be difference between thriving and surviving or even dying.

As storm clouds gather, tonight we investigate what we must do to

There's been a lot of talk of how bad things are - talk of recession,

depression and now, isolation from Europe. There's been less talk on

how to solve the problems. So, I'm going ton a mission to discover how

we can steer the economy through these troubled times. It's not

going to be easy, but the outcome will affect us all.

You may find my starting place surprising. A primary school in

London. We're going through the biggest squeeze on living standards

for decades. There's talk of a lost generation. But here, they're

trying to fight the gloom. They're preparing the children for a

different kind of future. You don't have to be brilliant to realise

that Europe's in a mess and that the growing, emerging economies are

not European economies. Therefore it seemed ill advised to focus

one's modern foreign language teaching solely on Europe. Their

teachers want them to learn a Chinese language, spoken by over a

billion people, a people whose economy and culture will

increasingly dominate our lives. China is a rising power. It's

courteous, apart from anything else, if you're doing business with a

power, to greet and speak to people in Mandarin. It needs to be taught

regularly and consistently throughout a child's school life,

starting in reception. Difficult challenge. Difficult, though it is,

it's a challenge worth taking on. It could be essential if future

British generations are to benefit We can't just look at schools for

solutions. We need to look in the work place as well. Calculating

your route. So I'm taking a journey to the heartland of British

This is what Britain used to do well. Manufacturing was the engine

of the nation's economic growth. This train was built here in Derby

in 1956, but in fact, the relationship between industry and

rail in Derby goes back further than that, to the 1800s. They still

make trains here and a lot of people are fighting hard to ensure

that rail is an industry here, not just a tourist attraction.

Manufacturing is still at the heart of the economy in the Midlands.

Bombardier's factory in Derby plays a big part in the local economy.

This is where they make the trains for London Underground.

And for some of the biggest main line rail operators in the country.

It's also the last train Paul Smith is one of the 3,000

people who still work here. You're going to take Stuart with you.

I like everything about the job. It's really demanding, challenging

and it really pushes you to try and achieve. Back in March, the Cabinet

came to Derby, manufacturing, they declared, was once again going to

be our path to prosperity. Derby is a great example of what the British

economy should be in the future, which is, a series of manufacturing

business that's export around the world. Those comments raised huge

hopes amongst the 3,000 workers at Bombardier. But the news which came

out just weeks later meant their joy was short lived.

This morning's dawn didn't bring warmth for the workers of

Bombardier. The Government awarded a massive contract to build new

trains for the Thameslink route not to Bombardier in Derby, but to

Siemens in Germany. I think it's disgraceful. I just

cannot understand how they can justify spending �1.4 billion of

British taxpayers money to boost the German economy. I just can't

understand that. After losing the contract, 1400 jobs are going at

this factory. Paul Smith has just been told his job is one of them.

Emotionally it's draining and I feel awful. I'm still shaking and

what not. I've got a family to support. What was it like going

home and telling your wife that? Horrendous. All sorts of thoughts

were going through my mind. What am I going to do next? What future

have I got? I might end up losing my house or all those kind of

things. It's almost like they're shutting down Britain.

Manufacturing matters? Big time, yeah. Do you think the politicians

understand that? No. Not at all. The Government said it had no

choice. It had to get best value But giving the German economy a

helping hand might seem strange. Germany will now be making our new

trains. Of course, they already The Mini for instance is a brand

that Britain invented. Now the cars are still manufactured here, but

the company which makes them is BMW of Germany. Britain seems to have

lost control of its manufacturing industry. Manufacturing used to be

a third of our economy. Now it's slumped to about a tenth. In its

place, newer, flashier, younger feeling businesses took over. We no

longer had to manufacture, the argument went, instead we turned to

the City to provide the nation's wealth and all went well, for a

while. But the credit crunch and recession destroyed much of that

dream. Just how serious the crash has been for our economy was made

clear by last month's gloomy economic forecasts. It painted a

picture of an economy which, far from bouncing back, was actually on

the edge of another recession. And that's why the debate about

manufacturing and the make up of our economy is centre stage once

again. I don't think we can exist just from the City. I don't think

you can exist just with services. I don't think you can exist just

flipping hamburgers. Manufacturing employs people and could employ

more people. It used to employ 6.5 million people. Now it's barely two

million. Ironically, to create new economic

growth, we may have to return to an older economic model, one in which

we actually make a lot more things. Turn left in 100 yards.

Manufacturing was our past. Could it also be a future destination?

The fortunes of this company echo the rise and fall of Britain's

manufacturing industry. When our industry led the world, this was

one of the most successful products of its kind. Made in Britain still

sells. I'm at one of the most famous parts of Derby's industrial

history, Royal Crown Derby. They've been making pottery here for about

260 years. They made it for the Titanic. They made the most

expensive plate ever in the world. They are about to make a new range,

and I'm going to help them. This is Tim my instructor. Hi. Right, where

do we start? This may look simple, but not for me. To survive in a

world dominated by cheaper labour in the Far East, British

manufacturers have had to go up market. Oh, my word, that looks

like it's my work. The buzz word is quality, no cheap crockery here.

It's a plate! Everybody! It's my plate. And this is where the

process all ends, as the plate comes out of the kiln. If this

doesn't save British industry, I don't know what will. For the local

MP, protecting manufacturing is no laughing matter. I do genuinely

believe that manufacturing has a vitally important role to play in

the recovery of the UK economy, by putting all our eggs in the

financial services basket, it meant when the crash arrived, the

resilience of the country was severely impaired. As a consequence,

we've suffered much more severely than other countries, like Germany,

for example, that continued to A few miles away is JCB, a genuine

British manufacturing success story. It employs 10,000 people. These are

JCB backhoe loaders. That's a digger, to you and me. From here at

their base in Staffordshire, they're exported throughout the

worldment Three quarters of all JCB's machines are sold abroad.

They sell to 150 countries. They're the most popular diggers of their

kind in the worldment For JCB, it's all about exports.

So should we rebuild our economy like JCB has built its business?

wend to India 30 years ago. We used to tell 50 machines a year. Then

100 machines a year. Last year we did I think 27,000 machines in

India. Now, really the whole world is our market, and particularly Far

Unlike JCB, almost half of British exports go to Europe. And Europe,

of course, is in deep crisis. Europe today: crippled by debt.

Riots on the streets. British taxpayers, on the hook for billions

of pounds of loans and guarantees, just to help bail out the euro. The

troubles in the eurozone are also stifling its economic growth, and

that is bad news for our companies, tried to sell their goods to a

recession hit Continent. Welcome to my world. This is where we make

structured steel for projects all around the UK. Sid Pepper has been

in the steel industry for over 40 years. Like many sports businesses

in Britain, he has suffered first and from the ongoing crisis in

Europe -- many small businesses. The biggest beer is the uncertainty

has the potential to cause serious problems for small companies like

myself. A lot of work in the UK is carried out by companies owned and

run from Europe. They are being cautious, putting a hold on

projects. I employ a these guys this week, will they get a wage

packet at the end of the week? It is as fundamental as that.

believes it is political ineptitude that is damaging British Business.

While they are messing around in Europe, we have to continue. I wish

they would get it sorted because we are going to be limited, I can only

keep pushing the boundaries a Just four days ago, European

leaders met. Desperate to save its the euro, 26 countries agreed to

try to strengthen their ties. David Cameron refused to sign Britain up.

Saying it would stop our ability to defend our financial services

industry. What is Owen offer isn't in Britain's interests, so I did

not agree to it -- what is on offer. Critics in the coalition claimed

that position has isolated Britain and undermined our relationship

with our biggest export markets. am bitterly disappointed by the

outcome. I think there is a real danger that over time, the United

Kingdom will be isolated and marginalised within the European

Union. We are going to be now excluded from key economic

decisions that will affect our country in the future. Clearly a

manufacturing company further north in England will think first about

the single market. We don't want to be marginalised from that single

market. That is not a risk we are running, claims the government.

are still members of the European Union, we have access to the single

market. But the deal that was offered to David Cameron in the

early hours of Friday morning was one that was not in our national

interest, didn't protect our interests. Therefore, the Prime

Minister was absolutely right to say he wouldn't sign up to it.

may be right, people may even agree with you, but surely, there is a

cost to damaging that relationship? The fact is that we do trade a lot

with European Union, but that is individual businesses and customers

trading with individual businesses and customers elsewhere. We want

access to European markets and it is right that European businesses

have access to our markets, and that will continue. The markets

remained worried. Indeed, many in the financial world think that at

best, Europe is tying itself in two years of austerity. At worst, the

euro could collapse. It cannot sustain itself. It is not

competitive, it can't pay its debt off. Whether it is the periphery

going first or the core knocking the periphery out, it is inevitable

that it will collapse. The politicians are buying time. There

is nothing you can do unless you create proper growth to move

yourself out of this type of crisis. You think the euro and the EU as an

institution will end? Absolutely. Some believe a collapse of the euro

will cost Britain billions. If Europe declines, we will have to

look for new opportunities further afield. Please find alternative

This is picture-postcard England. Rolling hills, babbling brooks, a

church spire and a Downton Abbey style manor house at the heart of

the village. But this most English of settings is the backdrop for a

photo-shoot with a twist. The internet children's clothing

company, miniwardrobe.com, is preparing to unveil its latest

collection. We are looking to market these products beyond the

British consumer, to consumers overseas. We are taking British

products, in Britain, and making them appealing to customers all

over the world. It is no coincidence that this business has

chosen an international look for its models. These children

represent exactly the new emerging markets, that the company wants to

export to. British businesses don't follow those markets abroad, then

they are going to miss out. They may be the difference between

thriving and surviving, or even dying in this climate. You have got

to be out there. 1, 2, 3! What could feel this company's growth,

and power Britain back to prosperity, is a business idea

based on the biggest global social change that has happened in

We think we are probably less than a quarter of the way through the

most remarkable growth of middle classes on a global basis that the

world will have seen for certainly, Will be 3 billion people in the

global middle class. This is extraordinary. These extraordinary

places are collectively known as the BRIC countries. Short for

Brazil, Russia, India, and of course, China. I experienced this

incredible growth first and when I was recently in China. Hundreds of

millions of potential new middle- class customers, for Britain's

ailing economy. Over the next decade, their likely growth will be

about the same as another one of them today, so another 13 trillion.

That will be close, if not more than double, the likely

contribution to global GDP, double of the US and Europe put together.

China is a very large market for European brands, including clothes,

fashion products, watches, automobiles. China is the second

largest market for BMW, for Audi, for Mercedes. So, the gold rush is

on. But if we are going to win here in China, are we doing enough?

Germany now exports more to the BRICs than to France. In the UK, if

you add all of the BRICs together, we export about the same to them as

we did to Ireland, and that is not our most important export market.

Earlier this year, the Chinese premier came to the UK. We thought

we had done well, getting around �1.5 billion worth of deals. Only

the next day, he went to Germany, and they announced almost �10

billion worth of deals. It made our attempts at breaking into this

market look feeble. China, Brazil, India, these are countries which

are growing and investing. If we have lost years of high

unemployment and no investment now, if we lose the race to the new

technologies, to the new industries, we will never, ever catch up again.

That is why I think it is so important to act now, to get our

economy moving, to get businesses confident, to start investing where

the new jobs are going to come from. For a long time there has been a

bit of a missed opportunity, we haven't been exporting as much to

the likes of India and China as we might have done. Steering our

economy to wards the newer growth societies is going to take time. --

to wards. Time we don't have. So in addition to the long-term strategy,

we also need a quick fix. In the past, we have turned to the

government to spend mac got way out of recession. -- to spend our way

out of recession. It is hoped major infrastructure projects like this

will provide a major boost to the economy. This is the King's Cross

station in London and they are ploughing some �400 million into

the side. This project is fully publicly funded, signed off in

times of plenty. We no longer have that kind of money. Our budget

deficit is the second largest in the EU. So rather than spending our

way out of trouble, the government is taking the axe to public

spending. But by cutting too much, are they undermining hopes of a

quick recovery? In the 19th century, 18th century, doctors' fault if you

cut patient and let them lead, that would make them better -- doctors

thought. It was quite medicine. This government still thinks more

cuts and more bleeding will make things better. This economy needs a

tonic, an antibiotic, they need a lift and then a long-term plan to

get the patient fit and healthy again. We have just got cuts, cuts,

cuts. I think the risk if we ignore our deficit, if we say, we can keep

on borrowing in the way that we were, are enormous. The easy thing

might be to pretend we don't have a problem. We do have a problem with

the deficit but if we can address it, we will see strong growth in

the future. It is 12 days to Christmas, and despite the attempts

at cheer, the tough times are taking a real toll. In Derby, Paul

Smith and his son are out Christmas shopping. He is facing a new year

without work. We have had to tighten our belts, because of not

knowing the future events. We can't go out and spend as much as we

would do at a normal Christmas, because of what is happening. I am

extremely angry, unbelievably let down. I feel I have still got the

hell of a lot to give, I have 30 years left to give to the system. I

have always worked. Incredibly For Paul, and people like him, the

economy needs a quick solution. But it takes time to develop new

markets. It takes time to pay back our debt. So some experts are

calling for a more radical package now, to kick-start growth. Wouldn't

it be great if very small businesses paid no tax at all on

their profits to a certain level? And up to another level, assuming

they are growing, they can pay only 10% or something. You can also

bring in quite large tax cuts for lower-paid workers. That includes

the consumption tax. You can cut VAT very heavily if you want to

have an effect. How much would you suggest? 1% or 2% doesn't have an

effect. I think you would have to make a 10% cut if you really wanted

people to start spending. government says the economy can't

afford tax cuts. Nothing is more important than getting the deficit

down. If we don't take those difficult decisions, if we don't

have credibility in our fiscal plans, then in the long term, we

leave ourselves in a very dangerous position. NTS, there are times when

governments will be unpopular -- and yes. The important thing is

that we do the right thing for the Preparing our children for a

different economic future is a big step. To grow, some say we are

going to need to rebalance our economy, and find new markets

abroad. We face an absolutely defining crisis, and you can stick

your head in the sand and rock bottom in the air and think it

isn't there, but we are in it. don't think that as a population,

we have really grasped our problem. There is something wrong with our

economy, that it is very badly balanced and is in the wrong place,

that we need to do something dramatic to move it into the right

place. That place is not familiar. Getting there won't be easy. We

will have to make some big decisions if we are to secure our