Initially, it is likely to have only a limited impact on our economy because Britain is predominantly a service-sector economy. Only 30 per cent of our economy is in manufacturing, the rest is in service industries including banking and insurance. It will also have a limited impact on our stock market. More than half of the FTSE 100 index is based on oils, pharmaceuticals, tobacco, utilities and banks. Of these sectors only oils will be affected.
Some people are worried about their pension, as many pension funds are invested in the Far East.
I believe the Asian turmoil will have only a limited impact on pension funds. For a start, only part of a fund's investments will be in Asia and in any case, the crisis is likely to make another big pension investment area, bonds, very attractive. So what you lose in the Far East, you are likely to gain in bonds. As far as the consumer is concerned, the Asian slowdown will probably be good news. We are likely to see a flood of Asian exports at knockdown prices in the coming months.