Making things matters. This is what Britain forgot | Ha-Joon Chang

The neglect of manufacturing and over-development of the financial sector is the cause of the economy's decline, not fear of leaving the EU

It's being blamed on the Brexit jitters. But the weakness in the UK economy that the latest figures reveal is actually a symptom of a much deeper malaise. Britain has never properly recovered from the 2008 financial crisis. At the end of 2015, inflation-adjusted income per capita in the UK was only 0.2% higher than its 2007 peak. This translates into an annual growth rate of 0.025% per year. How pathetic this performance is can be put into perspective by recalling that Japan's per capita income during its so-called "lost two decades" between 1990 and 2010 grew at 1% a year.

At the root of this inability to stage a real recovery is the serious imbalance that has developed in the past few decades - namely, the over-development of the UK financial sector and the atrophy of manufacturing. Right after the 2008 financial crisis there was a widespread recognition that the ballooning financial sector needed to be reined in. Even George Osborne talked excitedly for a while about the "march of the makers". That march never materialised, however, and manufacturing's share of GDP has stagnated at around 10%.

Related: UK trade deficit with EU hits new record

George Osborne talked excitedly about the 'march of the makers'. That march did not materialise

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