High levels of indebtedness, credit constraints and forthcoming fiscal austerity raise the likelihood that UK domestic demand will remain relatively weak over the next few years. As such, it raises the question of where UK economic growth will come from. In my article, I look at the UK manufacturing sector and how manufacturers have become more innovative and more entrepreneurial. Looking ahead, we are optimistic that the UK can improve its export performance. To date, companies have seemingly held back from passing on the fall in the exchange rate through lower prices, preferring instead to bolster their profit margins as they seek to repair their balance sheets. Over time, however, we suspect the fall in the exchange rate, in both nominal and real terms, will start to have a more pronounced impact on the UK’s export performance. Such a strategic shift is likely to be aided by policy, with the new coalition government indicating that it also believes the opportunity for growth lies in an expansion of exports, particularly to emerging Asia. To capitalise on this opportunity, however, it is imperative that the UK continues to invest in those high-value added industries in which it has a comparative advantage.