Austerity fears hit the UK manufacturing sector

The UK manufacturing sector has seen growth fall to a nine-month low in August with major concerns about the government's austerity measures coming to the fore. The UK government is literally cutting the public sector budget by billions upon billions of pounds and at the same time increasing taxes across the board. As a consequence, manufacturing in the UK is almost certain to slow down in the short to medium term which will have an impact on overall economic growth.

It is no secret that the recent GDP figures were greatly enhanced by a fairly buoyant manufacturing sector in the second quarter of 2010. Unfortunately, this assistance is unlikely to continue forever and a day and the UK government will probably need to depend more and more on the UK services sector. This is an industry which is dominated by the financial sector, the one sector in the UK which has attracted considerable and sustained criticism from the authorities.

Will the UK government be forced to lay off the financial services industry in order to encourage investment, and its support for the UK economy, while other sectors struggle to push ahead?