[Sudhir:] will largely be seen after the New Year's Day holiday so essentially you could still that the first regional survey to have been largely compiled of the results drawn er er from the beginning of this year... and, and the, and the, and you know you see some reference in the press release to estimates based o on our survey of manufacturing employment er er for the regions, those figures are consistent with our national figures on, on the trend in manufacturing employment and our short term forecast... which as a matter of fact was publ published at the end of last month so results.
[Richard:] Thank you very much. Erm... I think the main story as we sort of lead off from the, from the news release is saying that essentially erm our interpretation of the results is that the r the recovery has spread erm to all regions of the economy, at least in terms of orders erm and in terms of the mainland erm economy including Northern Ireland but I'll go into more details on that in a moment. Erm I'll just sort of er talk briefly about sort of main trends and, and sort of output and orders and so on and then go through in terms of some of the implications... that results as regards to employment and domestic crisis. Erm looking at the employ sorry looking at the output side er the question looking at trends and output over the last four months shows that in all the four regions manufacturers say that output has increased over the preceding four months. Erm the fastest rise is recorded in Yorkshire and Humberside... in Wales and in Scotland. Erm in Yorkshire and Humberside... a little bit unexpected, the October survey showed that orders were flat and expectations about output were also fairly flat so it's come through erm rather better than people thought it would in the Yorkshire and Humberside region. Erm in Wales and Scotland also slightly better than people expected erm a rise was, was expected but not as strong as we, as we've actually seen erm the Welsh and Scottish er economies, certainly there's cle clear evidence in Scotland but I think one can read it for Wales as well, showing that the manufacturing economy er very much being buoyed up by the electronic sector erm and that probably er... helping to explain why growth has been so strong in those parts of the country. Erm other regions also showing increases erm East Midlands, south east, West Midlands erm all of those show increases on the back of in previous bordl borders. The same true, though to a slightly less extent, I think the North West so although the increase is, is not as strong as in Yorkshire, Wales and Scotland, nevertheless continuing to
[speaker003:] [cough]
[Richard:] trends. Erm the parts of the country where things have been a bit flat seem to be the north and the south west and both of those are regions in which export orders received fell in the previous two surveys so that seems to be consistent although in the north they seem to have picked up somewhat in this survey erm and optimism is also erm... er stronger in this survey than it was in the previous one. Erm... in East Anglia erm sorry that's, that's true for the north and the south west, in East Anglia er output also has been flat erm but that seems to be related to weakness in export demand in the region erm export was the weakest er in that region of any region throughout the U K although total optimism is strong so it seems to be the case erm though business is being done the export economy erm in East Anglia. Finally Northern Ireland shows that there has been decline in output over the preceding four months and the only region t t to say that erm... it's fair to say that North Northern Ireland has been a weak region throughout er the recession erm and although in this survey optimism has climbed up a bit so it's close to the U K average, it's nevertheless a part of the U K which has really been behaving er rather differently from the rest of the economy... reflecting its sort of,i its particular problems and the fact that it's not part of the mainland economy. So that's what's been going on in terms of output, in terms of orders already received, orders are up in all mainland regions of the U K. It's the first time that we've seen that since er the beginning of the recession and that's the sense in which we think one can say erm reasonably sort of er straightforwardly that the recovery has indeed spread around the mainland economy. Again Yorkshire and Humberside er Scotland and Wales tending to lead that erm all of them as I said have got strong output trends erm in terms of Yorkshire and Humberside the orders er seem to be very much domestic rather than export... but widely spread between sectors which gives
[speaker003:] [cough]
[Richard:] reassurance to them. South east also doing well and in the south east, looking at the it seems to be the case, one can't put too strong an el too strong erm a sort of weight on it but it seems to be the case that in the south east it's the food, drink and tobacco sector and chemicals which are tending to, to lead the way there erm... Scotland also strong export demand. Orders growth has been less strong in other regions
[speaker003:] [clears throat]
[Richard:] the north which is consistent with the output story... and the south west again consistent, south west has seen falls in export orders for s three surveys in a row now erm the north west again export orders flat and again down in Northern Ireland.... Going from there to, and that's a sort of history of where things have happened over the previous four mon four months, to expectations about output... this is the first survey since the recession began in which all regions, mainland regions of the U K say that they expect output to increase over the coming four months. Admittedly in one or two cases the inference is fairly marginal but nevertheless it's the first time all the numbers have been positive. The regions which are leading are in some cases different from those which have been leading in terms of the historic trends over the last four months. Erm East Midlands erm expect to do well and that continues a reasonably firm trend. East Anglia also expects to do well and that seems to er stock numbers indicate an end to de-stocking in East Anglia and that being the explanation. South east very much consistent with past orders and with expectations of orders both total and export, so in this case it's sort of the export total story as well as the... domestic demand story helping the region. And the West Midlands for four or five surveys we've seen strong total orders broadly based between se sectors, strong output trends so the West Midlands being our leading er region is consistent with what we've seen from other surveys. Erm and then the weaker regions coming through, the north west, the south west... Wales and Northern Ireland
[speaker003:] [cough]
[Richard:] I think it's fair to say, particularly in the case of Wales which is perhaps one of the more surprising erm elements there, Wales as you know has tended to be quite a strong region during the recovery period erm... it may be because er certain, I think a lot of... although as I say Wales is a weaker region in terms of the expected
[speaker003:] [cough]
[Richard:] expected over the next four months it's nevertheless from a reasonably high level because it's done well so far erm and I wouldn't want to over stress the sense in which Wales is perhaps not doing as well as the others. Erm it would be wrong to say Wales is a weak region on the basis of this, it's just not, doesn't appear, or doesn't expect to grow as strongly as it was growing. That's the sort of the general trend erm and from there we can go on to other things.... As far as employment
[speaker003:] [cough]
[Richard:] is concerned erm we ask er companies questions about the trend in employment over the past four months and the expected trend... and we then calculate from that and the numbers are at the back of the book, pages seven page seventy one basically and on the graphs which follow. We calculate that on an estimate of what we think has happened to employment in the quarter erm and that calculation tells us, and it seems to be re reasonably right in the sense that it's got a, a good tr a good record of tracking erm the official numbers when they eventually come out.
[speaker003:] [cough]
[Richard:] Since the, that methodology tells us that although employment has been cut erm in the first quarter of this year on our calcul er calculations in many regions of the economy... with the south east particularly hard hit... well in one region, the West Midlands, for the first time we're seeing an increase in employment. Now admittedly it's an increase of two thousand out of about half a million so one isn't sort of er er getting over excited about it but nevertheless it's the first upward number which we've had. So employment tending to er level off there at er at the er level. Investment has turned positive overall at the U K level and the regions which are leading investment expectations and this is people's expectations about what they're going to do in terms of investment in plant and machinery over the year ahead which I think is probably the meaningful one to focus on rather than buildings numbers... erm the two regions which are leading that are the south west erm and that makes sense because the south west is, has the lowest number of firms who say that they're working below capacity... and also the West Midlands, for the last five surveys the West Midlands has either been the most optimistic
[speaker003:] [cough]
[Richard:] region in terms of the general business conditions, or the second most optimistic... so it's not entirely surprising that they now say that they expect to invest on the back of the strength of that optimism.... Domestic prices, only three regions expect prices to increase by a meaningful amount. Erm they are Yorkshire and Humberside which I think is probably related to the strength of orders and demand in that region, East Midlands where they, where it's sort of consistent with a trend erm in the last few surveys where they say that they have achieved modest price rises erm and where costs have not been falling, erm and also Wales. But nevertheless it's im important to remember that this is a survey erm which is conducted at the time of year when most compan or many companies raise their list prices and if one looks at the past sort of record of this survey both at the regional level and the national level, one generally does see a bit of an upturn in the pr in the prices numbers at this time of year because people are raising their list prices erm and once you allow for that erm I think these numbers are er very good in terms of prices trends, very low for the time of year. The other thing on that sort of erm side is that this is the first survey which we've had since we started doing the survey in nineteen eighty eight when the first numbers were compiled, it's the first survey which we've had where the majority of regions' manufacturers say that their unit costs have already fallen, erm we haven't seen that before, so the majority of regions said that the costs had fallen. Erm all that sort of leads me back to where I started from, our perception of this survey is that it's encouraging in the sense that it suggests that the recovery in the economy is erm widening and deepening if you like, it's widening in the sense that it's spreading to all the mainland regions of the U K and it's deepening in the sense that erm firstly, although there are regional variations within this, it's clearly not purely an export story and it's not purely a domestic story, it's a mixture of the two which gives us some reassurance... erm it's also deepening in the sense that there's no evidence from the survey of anything which is likely to trip up the recovery in the short term, and remember that most of these er questions relate to the next four months, not all of them, but mo most of them relate to the next four months so one doesn't want to extrapolate too far forward but nevertheless if you look at erm er most obviously sort of the... the crisis and the inflation questions, if you look at er
[speaker003:] [cough]
[Richard:] political and economic conditions abroad which has declined the constraint on exports in six out of, out of er the eleven regions, you see no evidence of any impending constraints likely to trip up the recovery. I'm not saying it's not gonna happen but there is no evidence to suggest that it will from the survey.
[Sudhir:] Thank you Richard. Questions ladies and gentlemen?...
[speaker003:] Er just one question I don't really understand the erm employment levels. Erm... on page seventy one it says London and the south east shows manufacturing employment still falling... is it the sin that war, then this would seriously affect the alliance, the, the NATO alliance. In other words we were, we were considerably concerned about the extent of the war. Now you can see what would have happened if McArthur's advice had, had been followed. The original objective was to liberate South Korea, it then began to unite Korea but if you raise the objective to an assault on China proper then, then you would have to quote General Ridgeway, who was a commander on the spot, er you'd be fighting the wrong war, the wrong time and in the wrong place. What would be the purpose of that escalation? And the answer was nothing unless you actually wish to attack China and er defeat China through military means and the task of doing that of course was enormously out of proportion to the original er cause of the war. Er the Cuban missiles crisis. Now here you had a very different situation because the nuclear dimension was now starting to become very important. The erm onset of that crisis was the attempt made by the Soviet Union to emplace erm medium range missile bases on Cuba. And President Truman, sorry [LAUGHTER] er President erm Kennedy er a democrat, it's democrats that always seem to get involved in these kinds of wars as, as was the case in the Vietnam war, erm er President Kennedy in fact took this to be er a radical change in the strategic balance and th this is the way the crisis was represented. But in fact the problem was the position of Castro and of the communist regime in Cuba. The er Soviets claimed that, that these missiles were not offensive, and indeed the weren't offensive. The United States had the same sort of missiles in Italy and in Turkey and, before this crisis had developed, President Kennedy had in fact ordered them er to be er er returned to the United States, these missiles had no strategic purpose at all because a major change that had come into the strategic equation was the arrival of the intercontinental ballistic missile, and it was these missiles, really, which held the strategic balance er and were to change in fact radically both international politics and global strategy over the years to come, but I'm going to talk about that later, the point I'm making here is that er Khrushchev claimed that the missiles were there in the event of an American assault on Cuba, they were a deterrent weapon in exactly the same way as the defensive deterrent weapons er were d were defensive er for er the United States and for the Soviet Union. And the context in which this was er argued er was er the Bay of Pigs invasion of Cuba, a C I A American supported invasion, er which er failed very badly but which certainly indicated the American desire to get rid of Castro... and er Khrushchev was asserting in effect that he had as much right to defend an ally as the United States had er to defend erm its allies and in the same sort of way. Now Kennedy had a dilemma... although Cuba was in the Caribbean, and although the United States had the biggest navy in the world, and the biggest airforce and was easily able to exterminate Cuba if it wa if it wished to, it was vulnerable, however, in other areas, in particular it was vulnerable in Berlin and it was vulnerable in Indo-China. In nineteen sixty one, prior to the crisis, the Americans had to face the rather humiliating settlement in Laos by which they accepted a communist erm er government, or at least a government which had communist members, erm Kennedy wanted to intervene in Laos but again was restrained by his British ally, MacMillan wouldn't in fact accept er that we should get involved in a ground war in Indo-China. Er in the case of Berlin, the er situation there was er that Russia er of course the Soviet Union could intervene in Berlin more or less at will, given that it was a small island in East Germany and was always a vulnerable, always, always in a position of being a hostage. So Kennedy couldn't act precipitantly, he couldn't simply do what he wanted to do which was to get rid of Castro, because if he'd done that then his policy objectives in other parts of the world would be in jeopardy. He couldn't threaten the Soviet Union directly because the Soviet Union was a nuclear power and couldn't be threatened... er so the course of action he took was intended to be moderate and to secure the objective solely of removing the missiles from Cuba, not of doing anything about the Cuban government or the regime or anything of that sort. And so they came to a negotiated settlement by which the Soviets agreed to withdraw the missiles and the United States promised that they would not interfere with Castro again, although from that day to this they have maintained of course their economic embargo. Er and here you have a case of diplomacy succeeding er and the spectre of war and possibly nuclear war erm fading out. Limits were set in short by both sides on what they sought to do and how they sought to do it and these limits erm weren't self-evident at the time I can tell you because the American military, the Chiefs of Staff on the Executive Committee that discussed this an and took the decisions, were all in favour of making s air strikes on these bases and possibly er an er an armed intervention... and so the military advice here er was er was rather similar to that of McArthur's, that is turn the, the crisis into er a different kind of crisis, turn it in fact into a war.... Now thirdly the Vietnam war, now this was perhaps the most harrowing war the Americans ever got themselves involved in and has had deep and permanent effects upon American policy making to this very day. Now what were the limits so far as the Vietnam war was concerned? Well initially the United States genuinely believed that with a small force, perhaps about a hundred thousand, maybe two hundred thousand troops, but principally using air power, that they could prevent the North Vietnamese from helping the Vietcong in the south and thus continuing the civil war. Now one can make judgments about means and indeed as I was saying in my last lecture, the actual capability of the weapons you have can only really be found out when you use them and then you can see, very often, that they are in fact ineffective. Now wa the, the erm war began with Operation Rolling Thunder and this was erm er President Johnson's plan er to pound major targets in North Vietnam by aerial bombardment and make, make the cost of their intervention in the south very high, so high that they would cut off the umbilical cord and starve the, the Vietcong into submission through ground operations in the south. That was the basic plan. He started off, as did Truman, in the United Nations by trying to get the Security Council to adopt a resolution er calling er the North Vietnamese aggressors and authorizing er an American, I E U N intervention. This failed. It failed because the French and the British were unhappy about supporting such a move... and indeed the United Nations looked very likely er er to be more erm willing to condemn the United States than it was to condemn North Vietnam... but the view of most countries in the world at that time was that North Viet that North and South Vietnam were part of the same country, that the Geneva accords in nineteen fifty four which called for unification should be upheld, and that the United States was interfering in, in a south east Asian country for no good reason. So it is a hostile atmosphere... and so hostile was it in the United Nations that the Americans decided to cripple it, and what they did was to invoke erm an article which called for the removal of votes from those states who were in, who were in arrears in the payment of their dues, of their, their funds... and there were several countries in that category, two of them the Soviet Union and France, and the reason why they had not pal paid their dues was because they objected to the use of the, these funds for peacekeeping forces which had not been authorized by the Security Council, in their argument the Security Council was the, the supreme authority and the General Assembly had in fact not the right to authorize er peacekeeping activities and indeed, if you read the charter, this is the case although legal advice is conflicting on that point as it usually is. Erm well the solution to that was to hold the meetings of the General Assembly, where the hostile American majority was, but not to permit a vote to be taken on any resolution... and this meant that President Johnson could pursue his, his then secret plan of bombing the north without any hostile United Nations resolution being passed against it. Two years later the Americans quietly dropped the whole issue and the, the UN returned to normal but by that time of course the situation had become what it was, er er a war. Well limits then, so air, air, air bombardment and the use of some ground forces but principally to, to get er the South Vietnamese army er to contest er the Vietcong on the ground. Well that failed... as you would imagine it to fail if you take the civil war in Vietnam as being in effect a, a war of national liberation, as the Soviets called it, because what the North Vietnamese wanted was in fact national unity. They were fighting for an objective which was far more important than local arrangements or local agreements er with er foreign imperial powers about who governed what er in, in their own country. And so they were prepared to go on taking the punishment, taking the cost because their objectives were,ha had a different scale of value to the objectives sought by the United States.... Two or three years later with half a million troops they are still no further forward in their struggle in Vietnam and the cost this time was to the United States' political system because the effect upon domestic politics was fairly severe. After the North Vietnamese revealed that they were able to sustain erm a w er their war in er erm the south it seemed regardless of what, what the United States could do to them, er after they'd revealed this in the Tet offensive of nineteen sixty eight, then President Johnson announced he would not be standing for re-election, and that was a significant admission of political defeat... and if you remember, well you probably won't [LAUGHTER] remember but you [] certainly should've read about it, President Nixon was returned with a, a majority er er on the platform of ending the Vietnam war. The casualties I think were something like fifty, fifty seven thousand dead and a very very large number of people wounded because of the particularly beastly kind of war with all kinds of weapons being used. Now why was the United States defeated and was this war a rational war? Well the objective was the maintenance of a friendly regime er in a country which had become part of the American sphere of influence. No one however at the time questioned why it was necessary to do that. What was the significance of keeping South Vietnam in the American fold? No one asked that question, they simply focused upon er the, the communist insurrection in t any more questions ladies and gentlemen?... If not there are some drinks at the back and you can ask us any questions informally. Thank you very much for coming. Thank you....