THE head of Scottish Chambers of Commerce last night reacted with outrage over comments made by high-profile fund manager Nicola Horlick, who said she was grateful to Margaret Thatcher for destroying the UK manufacturing base.

Horlick, who was addressing a gathering of fund managers in London, said former prime minister Thatcher's reforms of the 1980s had forced people in the UK to focus on the financial markets instead.

However, last night Liz Cameron, director of the Scottish Chambers of Commerce, said: "This is utter nonsense. While the financial sector has grown and evolved over the past few years, manufacturing is still a big driver in the Scottish economy.

"The government of today should do everything possible to not only ensure the manufacturing sector survives, but that it also grows. Our economy cannot survive with a service sector alone."

The Scottish Chambers of Commerce is the umbrella organisation of the local chambers of commerce, whose prime function is to promote the interests of local chambers and their member businesses.

While there were signs yesterday in the official Scottish Executive figures that manufacturing output declined by 0.7per cent in the third quarter, caused primarily by an ongoing electronics downturn, sub-sectors such as chemicals and mechanical engineering continued to grow.

Nonetheless, Horlick said that the UK had no manufacturing legacy left, and that the UK was the best-placed country in western Europe to take advantage of the investment opportunities provided by Asia's emerging markets.

She said: "I'm quite grateful for what Margaret Thatcher did to destroy the manufacturing base in the 1980s. We had to focus on financial markets, which has worked out quite well when you look at China."

Horlick said Asia would continue to dominate manufacturing as massive industrialisation was still taking place and there remained enormous potential for growth. "I'd rather be the UK than Germany right now with its manufacturing legacy, " she added.

Horlick is one of the UK's highest-profile fund managers. She earned a reputation for being a City superwoman in the 1990s when she juggled being managing director of Morgan Grenfell Asset Management with raising a family of six children.

She founded SG Asset Management in 1997 before launching a new fund management boutique, Bramdean, in January last year.

Horlick also spoke about her outlook for global equity markets over the next two years. She said the low inflation and economically stable climate in the UK made it a less exciting place to invest now than, say, five years ago.

The real risk, and therefore the potential for index-beating returns, lay in the east.

Global markets had the potential to post double-digit returns in 2006 just as they did last year, because they were still recovering, she said.

However, global indices should not climb back to the levels they reached at the height of the technology bubble five years ago. If they did, they would be overvalued and the markets would see a further period of correction.