The UK’s Catastrophic Economic Crisis Explained, How British Destroyed Britain
Summary
TLDRLe Royaume-Uni, autrefois dirigé par l'un des plus grands empires de l'histoire, fait face à un déclin économique marqué. Depuis 2007, la croissance économique est quasi inexistante, la productivité stagne et les salaires réels ont tendance à l'immobilisme. Les crises financières de 2008 et 2020 ont aggravé la situation, laissant un héritage de dettes et d'instabilité politique. Les politiques économiques et la sortie de l'UE semblent avoir un impact négatif, laissant le pays confronté à de nombreux défis, tels que la baisse de la natalité, la dépendance à l'industrie financière et un marché des capitaux brisé, menaçant sa position sur la scène mondiale.
Takeaways
- 🏛️ L'empire britannique, autrefois le plus grand de l'histoire, est en train de perdre de son importance mondiale.
- 📉 Le PIB par habitant du Royaume-Uni est passé d'un niveau légèrement supérieur à celui des États-Unis en 2007 à seulement 60% de celui de l'Amérique du Nord aujourd'hui.
- 💡 La stagnation de la productivité et le manque d'innovation et d'investissement sont à l'origine de la faiblesse économique du Royaume-Uni depuis 2007.
- 💼 Les entreprises cotées en bourse au Royaume-Uni ont affiché une croissance très faible sur les deux dernières décennies, avec seulement une augmentation de 25% du Footsie depuis le début du siècle.
- 📊 La crise financière de 2008 a eu un impact considérable sur l'économie britannique, entraînant une hausse significative de la dette publique et une décennie d'austérité.
- 📉 La pandémie de COVID-19 a provoqué une chute record du PIB de 11% en 2020, la pire performance économique depuis 1709.
- 💔 La politique économique et l'instabilité politique, y compris le Brexit, ont contribué à la perte de confiance du public dans le gouvernement et l'administration économique du Royaume-Uni.
- 👶 Le Royaume-Uni fait face à un défi démographique avec des taux de natalité sous le niveau de remplacement depuis 1973, ce qui affecte la main-d'œuvre et la dépense publique à long terme.
- 💼 Le secteur financier, bien que productif, est relativement déconnecté de l'économie nationale et contribue à un déséquilibre économique dans le pays.
- 💔 La détérioration de l'industrie manufacturière et la dépendance croissante de l'économie britannique envers les services ont entravé la compétitivité internationale du pays.
- 🏦 Les problèmes structurels, tels qu'une livre sterling surestimée et un marché financier brisé, entravent l'investissement et la croissance économique.
Q & A
Quel est le PIB par habitant du Royaume-Uni par rapport à celui des États-Unis et de la Pologne?
-Le PIB par habitant du Royaume-Uni est de 46 000 dollars, ce qui représente seulement 60% de celui des États-Unis, qui est de 76 000 dollars. Si les tendances actuelles se poursuivent, la Pologne pourrait dépasser le Royaume-Uni en termes de PIB par habitant dans un délai de dix ans.
Pourquoi le Royaume-Uni est-il considéré comme étant en déclin économique depuis 2007?
-Le Royaume-Uni est en déclin économique depuis 2007 en raison d'une stagnation de la croissance de la productivité, d'un manque d'innovation et d'investissement, ce qui a également affecté les salaires réels, qui n'ont pas augmenté depuis 2008, entraînant une stagnation de la puissance d'achat.
Quels ont été les impacts de la crise financière de 2008 sur l'économie du Royaume-Uni?
-La crise financière de 2008 a eu un impact massif sur l'économie du Royaume-Uni, en raison de son secteur financier important. Plusieurs banques ont fait face à des problèmes de liquidité, entraînant des interventions d'urgence du gouvernement et de la Banque d'Angleterre. Ces interventions ont entraîné une augmentation significative de la dette publique et une décennie d'austérité.
Comment la pandémie de COVID-19 a-t-elle affecté l'économie du Royaume-Uni?
-La pandémie de COVID-19 a provoqué une récession record avec une baisse du PIB de 11% en 2020, la pire performance économique depuis 1709. Le gouvernement a utilisé la financement inflationniste pour maintenir l'économie, ce qui a entraîné une augmentation significative de la dette publique et de l'inflation.
Quels sont les principaux facteurs qui expliquent la faiblesse de l'économie du Royaume-Uni par rapport à ses pairs?
-La faiblesse de l'économie du Royaume-Uni par rapport à celle de ses pairs est due à une productivité stagnante, un investissement faible, une dépendance excessive sur le secteur financier, et une industrie manufacturière en déclin. De plus, le Royaume-Uni souffre d'un vieillissement de la population et d'un manque d'attrait pour les travailleurs hautement qualifiés.
Quelle a été l'impact de la sortie du Royaume-Uni de l'Union européenne (Brexit) sur son économie?
-Le Brexit a eu des conséquences négatives à court et à long terme pour l'économie du Royaume-Uni, notamment en termes de coûts supplémentaires pour les entreprises liées aux chaînes d'approvisionnement et de transferts de tâches pour le secteur financier vers d'autres pays européens.
Pourquoi le secteur financier du Royaume-Uni est-il considéré comme un problème pour l'économie du pays?
-Le secteur financier, bien qu'important pour le Royaume-Uni, est considéré comme un problème car il est principalement axé sur les affaires internationales et ne contribue pas suffisamment à l'investissement et à la productivité dans le reste du pays. Cela a également conduit à une surévaluation de la livre sterling, rendant d'autres secteurs moins compétitifs à l'étranger.
Quelles sont les conséquences de la déclinaison de l'industrie manufacturière britannique?
-La déclinaison de l'industrie manufacturière a entraîné une économie britannique fortement dépendante des services, avec un déficit commercial croissant en marchandises et un surplus commercial en services. Cela reflète le coût réel d'une monnaie surévaluée et la perte de compétitivité de l'industrie manufacturière.
Quels défis politiques et économiques le Royaume-Uni doit-il relever face à son économie en déclin?
-Le Royaume-Uni doit relever de défis tels que la gestion de sa dette publique élevée, la réduction des dépenses publiques ou l'augmentation des taux d'imposition, tout en gérant les demandes d'augmentation des investissements dans les services publics et en réformant son modèle économique pour améliorer la productivité et l'investissement.
Quelle est la position commerciale du Royaume-Uni et comment cela affecte-t-il son économie?
-Le Royaume-Uni a un déficit commercial chronique, ayant importé plus de biens et de services que ce qu'il n'a exporté chaque année depuis 1998, à l'exception de 2020. Ce déficit commercial contribue à la vulnérabilité économique du pays et souligne la nécessité d'une restructuration de son économie et de ses alliances commerciales.
Quels sont les défis auxquels le gouvernement travailliste, s'il est élu, pourrait être confronté pour améliorer l'économie du Royaume-Uni?
-Le gouvernement travailliste pourrait être confronté à des défis tels que la nécessité d'augmenter les dépenses publiques pour améliorer les services, tout en gérant la dette publique et en trouvant un équilibre entre les augmentations des impôts et la stimulation de la croissance économique.
Outlines
📉 Déclin économique du Royaume-Uni
Le Royaume-Uni, autrefois dirigeant de l'un des plus grands empires de l'histoire, fait face à un déclin dramatique. Depuis 2007, la croissance économique a été quasi inexistante, avec un PIB par habitant passant de légèrement supérieur à celui des États-Unis à seulement 60% d'Amérique, soit 46 000 dollars contre 76 000. Le Royaume-Uni est même plus pauvre que Mississippi, l'état le plus pauvre des États-Unis, avec un PIB par habitant d'environ 48 000 dollars. La stagnation des salaires réels et la faiblesse de l'innovation et de l'investissement contribuent à cette situation, soulignant un manque de résilience face aux crises économiques et une inégalité croissante par rapport à d'autres pays européens.
💹 Récessions et conséquences sur l'économie britannique
Les crises économiques de 2008 et 2020 ont eu un impact profond sur l'économie du Royaume-Uni, notamment en raison de la dépendance à l'égard du secteur financier. La récession de 2008 a été la pire depuis la Seconde Guerre mondiale, suivie d'une décennie d'austérité due à la hausse de la dette gouvernementale. La pandémie de COVID-19 a provoqué une nouvelle récession en 2020, avec une chute de 11% du PIB, le pire bilan économique depuis 1709. Les mesures d'inflation et d'austérité ont eu des conséquences à long terme, notamment en termes d'inflation et de coût de la vie, exacerbant la crise économique et sociale.
📈 Défis fondamentaux et investissements dans le Royaume-Uni
Le Royaume-Uni fait face à des problèmes fondamentaux tels que la stagnation de la productivité depuis 2007, associée à des niveaux d'investissement très faibles, en particulier dans le secteur privé. La concentration de l'investissement dans quelques régions, comme Londres, crée des disparités économiques importantes avec d'autres régions moins prospères. La dépendance à l'égard du secteur financier, qui est internationalement axé, a entravé l'investissement dans le reste du pays, contribuant ainsi à la détérioration de l'économie nationale.
👶 Démographie et main-d'œuvre au Royaume-Uni
La baisse des taux de natalité et l'augmentation de la population âgée posent des défis pour l'économie britannique. Malgré une croissance démographique due à l'immigration, le Royaume-Uni souffre d'un 'brain drain', avec une perte de travailleurs qualifiés vers d'autres économies développées. Cela affecte la productivité et la compétitivité du pays, en particulier en dehors de Londres, où le secteur financier reste prospère et attire l'essentiel de l'investissement étranger direct.
🏭 Déclin de l'industrie manufacturière et impact économique
Le Royaume-Uni a connu un déclin significatif de son secteur manufacturier, passant de la première place mondiale en termes de production industrielle en 1900 à la onzième place actuellement. Cette transition a entraîné une économie de plus en plus axée sur les services, avec 81% du PIB provenant de cette source. Cependant, cela a également créé un déficit commercial croissant en raison d'une monnaie surévaluée, rendant les exportations plus chères et les importations plus abordables.
🏦 Défis politiques et financiers pour le Royaume-Uni
Les politiques économiques du Royaume-Uni, marquées par des mesures d'austérité, sont confrontées à des problèmes financiers importants, notamment une dette publique élevée représentant près de 100% du PIB. Les paiements d'intérêts sur cette dette sont devenus lourds, dépassant même les dépenses sur l'éducation. La politique économique future, qu'elle soit menée par le parti conservateur ou le parti travailliste, doit faire face à des décisions difficiles concernant les dépenses publiques et les impôts, tout en cherchant à améliorer la position commerciale du pays et en établissant de nouveaux accords commerciaux internationaux.
🌏 Position géopolitique du Royaume-Uni
Le Royaume-Uni est confronté à une reconnaissance déclinante de son importance sur la scène mondiale. L'ambassadeur chinois a souligné que le pays n'est ni un rival ni un adversaire de la Chine, illustrant la perte de statut du Royaume-Uni. Les défis économiques et politiques actuels menacent la position du pays sur la scène internationale, et les mesures politiques futures devront être prises pour restaurer la prospérité et l'influence du Royaume-Uni.
Mindmap
Keywords
💡Empire britannique
💡PIB par habitant
💡Croissance économique
💡Productivité
💡Salaires réels
💡Crisis financière de 2008
💡Austerité
💡Brexit
💡Inflation
💡Investissement
💡Santé Nationale (NHS)
💡Dette publique
Highlights
Le Royaume-Uni, qui a autrefois dirigé l'Empire le plus vaste de l'histoire, est désormais en train de perdre de son importance mondiale.
En 2007, le PIB par habitant du Royaume-Uni était légèrement supérieur à celui des États-Unis, mais il n'est maintenant que de 60% de celui de l'Amérique avec un PIB par habitant de 46 000 dollars contre 76 000 dollars aux États-Unis.
Le Royaume-Uni est en fait plus pauvre que Mississippi, l'État le plus pauvre des États-Unis, avec un PIB par habitant d'environ 48 000 dollars.
Si les tendances actuelles se poursuivent, la Pologne pourrait dépasser le Royaume-Uni en termes de PIB par habitant dans un délai de dix ans.
Il n'y a pratiquement pas de croissance économique ajustée pour l'inflation au Royaume-Uni depuis 2007, en partie à cause de l'arrêt brutal de la croissance de la productivité.
Si la tendance de la productivité avant 2007 avait continué, l'économie du Royaume-Uni aurait été 25% plus grande qu'elle n'est actuellement.
Les salaires réels, ajustés pour l'inflation, montrent que les Britanniques gagnent une somme similaire à celle de 2008, signifiant que le pouvoir d'achat a stagné.
Les entreprises cotées en bourse au Royaume-Uni ont eu une mauvaise décennie passée, comme le montre l'indice Footsie, qui a augmenté de seulement 25% depuis le début du siècle.
Comparativement, l'indice S&P 500 américain a augmenté de plus de 250% pendant la même période, soit environ 10 fois plus.
L'impact des verrous pendant la pandémie selon le Centre pour la justice sociale est que la vie recule pour de nombreuses personnes souffrant de troubles de santé mentale.
La crise financière de 2008 a été la pire récession au Royaume-Uni depuis la Seconde Guerre mondiale, principalement à cause de la grande taille de son secteur financier.
Après la crise financière, le gouvernement et la Banque d'Angleterre ont fourni des prêts d'urgence pour restaurer la confiance et prévenir la propagation de la crise.
La crise de 2008 a également eu un impact sur le reste de l'économie à cause de la baisse des prêts et de la défiance publique, entraînant une baisse de la dépense et une réduction du PIB du pays de 6%.
La pandémie de COVID-19 a causé une baisse record du PIB de 11% en 2020, la pire performance économique depuis 1709.
L'inflation est montée à 11,1% en octobre 2022, un pic de 40 ans, conduisant la Banque d'Angleterre à augmenter les taux d'intérêt pour freiner l'économie et atténuer l'inflation.
Le Royaume-Uni souffre d'une productivité stagnante depuis 2007, ce qui signifie que le pays n'est pas en train de rendre ses ressources et sa main-d'œuvre plus efficaces au fil du temps.
Le Royaume-Uni est en fait le dernier des pays du G7 en termes d'investissement, avec l'une des plus faibles investissements dans les infrastructures et la recherche et développement.
Le secteur financier du Royaume-Uni est l'un des plus grands exportateurs de services financiers au monde, avec un excédent de 99,2 milliards de livres en 2022.
L'économie du Royaume-Uni est fortement dépendante des services, avec 81% du PIB dans ce secteur, reflétant une déclinaison de l'industrie manufacturière.
Le Brexit a eu un impact négatif à la fois à court et à long terme, entraînant une pire récession et une récupération pour le Royaume-Uni par rapport aux pays restant dans l'UE.
L'ambassadeur chinois a clairement exprimé que le Royaume-Uni n'est ni un concurrent ni un adversaire, demandant au gouvernement britannique de ne pas surestimer son impact sur la scène mondiale.
Transcripts
not a lot of countries are experiencing
a downfall as dramatic as the United
Kingdom the country that once ruled over
the largest Empire in history is now
Fading Into
irrelevance in 2007 the country had a
slightly higher GDP per capita than the
United States now it only has 60% of
America's figure with a GDP per capita
of
$46,000 compared to
$76,000 in the US the UK is actually
poorer than Mississippi the poorest
state in the US with a GDP per capita of
around
$48,000 and if current trends continue
Poland could overtake the UK in GDP per
capita within a decade this doesn't come
out of nowhere adjusted for inflation
there is been virtually no economic
growth in the UK since
2007 in part this is due to to a sudden
halt in productivity growth if the
productivity trend from before 2007 had
continued the UK's economy would have
been 25% bigger than it is now but
there's a lack of innovation and
investment and the country is falling
behind its peers this has also had an
effect on real wages meaning wages
adjusted for inflation Brits are earning
a similar amount now as back in 2008
meaning purchasing power has stalled
before this period real wages used to
grow 33% a decade publicly traded
companies in the UK also had a terrible
past two decades we can see this in the
footsie stock index tracking the
country's 100 biggest stocks at the time
of writing this video it has only grown
about 25% since the beginning of the
century for comparison the American S&P
500 Index has grown over
250% during the same time period or
around you know 10 times as much
but all these things leave us
questioning why the country is
struggling so much or as Britain's would
say in a bit of a pickle is it
government policy International
competition or other fundamentals that
are causing this decline in this video
we'll take a close look at the UK's
economy and we'll go over the possible
consequences that this downfall might
have and you can see the UK the higher
these bars are the more equal the UK is
much more unequal than many other
countries around Europe with no plans to
improve its resilience Britain is
heading for systems collapse everyone's
on strike the NHS is broken and we're
skint Where Do We Go From Here the
impact of lockdowns during the pandemic
according to the Center for social
justice which produced the report is
that life is going backwards for many
with staggeringly high numbers
experiencing mental health conditions as
mentioned earlier things started going
down downhill for the UK from 2008 so to
truly understand the roots of the
problem we have to look back to the
great financial crisis 2008 saw the
worst recession in the UK since World
War II only surpassed by the co shock in
2020 because the country has a large
financial sector the impact of the
crisis was huge following the collapse
of the Layman brothers and the issues
with subprime mortgages in the US the
Global Financial Market was in shambles
many banks globally including the ones
in the UK faced liquidity issues they
couldn't get their customers cash back
because they were holding bad loans the
British Northern Rock Bank experienced
these problems which led to the First
Bank Run in the UK in 50 years there
were also Financial issues with the hbos
bank the Royal Bank of Scotland and the
Bradford and Bingley Bank the government
in London as well as the country's
Central Bank the bank of England stepped
in to provide Emergency Loans this was
to restore confidence and to prevent the
crisis from spreading even further still
these problems in the financial sector
had long- lasting effects because the
government spent a lot of money on
bailing out Banks and fighting the
crisis government debt soared the
problems with government finances led to
a decade of austerity which we'll
discuss later the 2008 crisis also had
an impact on the rest of the economy
because of reduced lending and public
Trust spending declined and the
country's GDP fell by 6% but this
recession was very different from others
which we can see on this chart comparing
the post recession recoveries most of
the time growth is back on track 3 or 4
years after the crisis starts but in
2008 the crisis had caused a stagnation
of about a decade what makes us even
worse is that 12 years later the country
got hit by another economic disaster or
we should say two the co pandemic caused
a record GDP decline of 11% in 2020 the
worst economic performance since
1709 it was a steeper decline than any
other major economy like many other
governments London turned to
inflationary financing to prevent things
from going from bad to worse basically
it was keeping the economy alive with
government debt this debt went from 86%
of GDP to 5% of GDP in a year up about
20 percentage points the country's
Central Bank the bank of England also
helped with this through quantitative
easing it pumped nearly half a trillion
pounds in the economy in 2020 and 2021
this worked out in the first year as
most of the initial damage was already
undone by 2021 but giving a lot of
stimulus to the economy comes with a
price as it can create inflation later
on this process also called the
transmission process can take one or two
years to complete as the UK was gearing
up for a postco inflation wave it was
hit by another crisis when Russia
invaded Ukraine in 2022 Energy prices
soared due to sanctions at its peak
electricity in the UK became nearly 10
times as expensive the government in
London tried to help consumers with
support packages but that didn't really
do much to prevent inflation combined
with the effects of Co there was a
massive cost of living crisis in October
of 2022 inflation reached a peak of
11.1% a 40-year high the bank of England
had to increase interest rates to slow
down the economy and ease inflation
think of high interest rates like hit in
the brakes where people lend less money
and buy less goods for example it
becomes more expensive to finance a car
with a loan but because purchasing power
had just been slashed after the cost of
living crisis the spending decline got
even worse the same car that had just
gotten harder to finance was also way
more expensive due to inflation and this
didn't just happen with cars but
throughout the entire economy in the
final half of 2023 the UK was once again
in a recession surprisingly it was the
only G7 Nation to be in Decline although
the other major economies experienced
stagnation GDP is once again recovering
in 2024 but the crisis IES of 2020 and
2022 hurt the country permanently
economists predict that it caused a
long-term loss of 3% of
GDP still this whole story doesn't seem
to differ much from the rest of the
world most countries experienced the
same problems in 2008 2020 and 2022 but
the UK suffered way more from these
crises than others did which leads to an
interesting question why is Britain so
much worse off than its peers well to
understand this we have to look at the
country's economic
fundamentals as we've already discussed
productivity has stalled ever since 2007
this means that the country isn't making
its people and resources more effective
over time stagnating productivity goes
hand inand with low investment
investment into things like
infrastructure and research and
development is usually what drives
productivity growth unsurprisingly the
UK consistently ranks as the lowest of
the G7 and among the lowest of the 37
developed economies in terms of
investment one of the key metrics in
this regard is gross fixed Capital
formation which measures how much money
is invested rather than consumed on this
chart we can see that ever since the
late 1990s the UK has been lagging
behind its peers France and the United
States the private sector is one of the
issues here as the UK has the lowest
private sector investment in the G7 this
has only been a problem for the last
last two decades back in 1996 it was
actually second in private investment
among G7 countries if we dig even deeper
we can find the root cause for this
decline before 2008 there was a few
highly productive companies that were
causing most of the productivity growth
the top 5% had growth in the double
digits these businesses included the
UK's successful Finance sector the UK is
the largest net exporter of financial
services globally with a 99 2 billion
pound Surplus in the financial sector in
2022 London is competing with New York
as the world's Financial Capital the
point is though that the rest of the
economy didn't enjoy similar growth the
bottom 40% of companies were already
stagnating or even declining in
productivity before 2008 in economics
this is called a two-speed economy where
some parts are growing but other parts
are stagnating or even declining the
two-speed problem is way worse in the UK
than in other countries such as France
or Germany as you can see on this chart
Britain has more low productivity
companies on the left and more High
productivity companies on the right we
can also see these divisions at a
regional level some well-off parts of
London have double or triple the income
of Southern Scotland or west Wales
within London there's also a nearly
triple income difference between the
poorest and the wealthiest districts
this is a symptom of wider problems it
means that some some parts of the
country are just way more productive
than other parts the reason is that
investment is concentrated in just a few
areas London is attracting most of the
foreign direct investment with around 40
to 50% of the money going there no
wonder that London has outgrown all
other regions by a long stretch but
following the crisis in 2008 the cracks
begin to show the businesses in the
financial sector slowed down this
revealed the fact that most of the
economy already had serious productivity
and investment issues beforehand so a
big issue is that the UK's workers are
not productive enough at least outside
of London but another fundamental
problem is that the country doesn't have
enough workers to begin with the UK's
Workforce is collapsing which
undoubtedly plays a role in the economic
decline Britain's birth rates have been
below the replacement level since
1973 largely following Trends in other
developed Nations like the us or France
it sits at 1.56 births per woman right
now which would translate into every
generation being more than 20% smaller
still the population has continued to
grow and is expected to grow until 2050
in part this is because of the Aging
population because people simply get
older the growth in the elderly
population makes up for the lower births
but that's not solving the economic
problems since the elderly population
doesn't have much economic output in
about 25 years a quarter of UK citizens
will be over 65 which will have a major
impact on public finances while spending
on health care and Social Security only
increases income and tax revenues only
goes down as more people retire however
the Aging problems in the UK aren't that
bad relatively speaking the country's
population pyramid is actually pretty
healthy at least compared to Nations
like Italy various European countries
have new generations 60% smaller than
the boomer generation which is something
the UK doesn't have to worry about this
is because birth rates are slightly
better but also due to high levels of
immigration for 30 years now Britain has
been consistently taking in more people
than went out of the country net
immigration has increased enormously
going from 100,000 yearly to nearly 3/4
of a million in
2022 but there's one problem with
immigration it's hard to get
high-skilled Workers into the country in
fact it's hard to keep high-skilled
workers in the UK while 1.2 million
people migrated to the country in 2023
more than 500,000 moved out of the UK
during the same year this is causing a
weird brain drain situation it's
attracting people from lower developed
countries while it's losing people to
higher developed economies because other
nations offer better salaries the more
productive workers in the UK naturally
move out now one area of the economy
seems to be exempt from these problems
the finance industry the banks and
insurers in London still offer good
salaries and their workers are very
productive as they're the only one
winning in the UK's two-p speed economy
but what if the finance industry is
actually part of the problem you see the
country's capital markets are broken
this is pretty obvious the country with
an enormous financial sector is
ironically the one struggling with
underinvestment it's clear that the
financial activities in London aren't
really connected with the rest of the
country and total the UK's financial
institutions have $33 trillion in assets
which basically includes all the
Investments and Loans on their balance
sheets there is no way that the UK
economy of $3 trillion can absorb all of
that money with financial assets 11
times GDP there's simply not enough
demand for loans and there are not
enough businesses to invest in but
that's the point London's financial
sector is mostly doing business
internationally for comparison the US
financial sector has assets five times
the GDP which is more in line with
domestic demands for loans and
investment while this outsized financial
sector had its benefits for London it
leads to a broken system for the rest of
the country the 2008 crisis hit the UK
way harder than other countries due to
the overdependence on finance and there
are also other structural problems the
pound is arguably overvalued because of
the huge demand in the financial system
this makes other Industries
uncompetitive internationally with an
overvalued currency exports are more
expensive and imports are cheaper You
could argue that the rise of the
financial sector came at the expense of
the UK's manufacturing industry in 1900
Britain had the biggest industrial
output in the world as it was the first
country to industrialize but more than a
100 years later there's nothing left of
this in the area of total manufacturing
output it's only 11th in the world over
the last 30 years in particular the
industrial decline has gotten very bad
the value added from manufacturing was
haved from 16% of GDP to 8% of GDP all
of the simple manufacturing has gone to
countries like China while high-end
manufacturing has been more successful
in Germany and the US the effect of this
has been clear the UK now has an economy
heavily reliant on services with 81% of
GDP falling in this category in the
nation's trade position we can also see
this trend it has a growing Trade
Surplus in services and a growing trade
deficit in Goods overall Britain's total
trade balance is at a deficit which
shows the true cost of an overvalued
currency now we could go on for hours
talking about all the other economic
factors playing into this but you get
the point there's something
fundamentally wrong with the UK's
economic model model understandably this
is having an impact on the country's
politics voters are fed up and there has
been a huge loss of confidence in the
UK's governance although everyone
recognizes the problems by now the
different parties disagree on the
correct policies to fight them a
watershed moment Was the brexit vote in
2016 it decided whether the country
should leave the European Union and it
was a very close call 51 9% of Voters
wanted to leave while
48.1% wanted to stay brexit was
undoubtedly a trade-off the benefits
included freedom from the EU in economic
policymaking and more protection for
domestic Industries but critics of
brexit pointed out that the UK relies
heavily on free trade with the EU like
many economists predicted brexit had a
negative effect both in the short and
long term after Co the UK had a worse
recession and recovery than countries
who remained in the EU in part this was
caused by the downstream effects of
brexit companies who used to do business
with the EU now have higher costs in
their supply chains because of trade
barriers for London's beloved financial
industry there were also some bad
consequences over 440 Financial firms
have moved jobs out of the UK and banks
have transferred nearly $1.4 trillion to
European accounts Ireland France
Luxembourg and Germany have welcomed
this with open arms still staying in the
EU would have had some bad effects
economically the UK had a growing trade
deficit with the rest of the Union which
was the biggest contributor to the
overall trade deficit in 1999 the UK had
a deficit with the EU of around 10
billion pounds in 2019 just 20 years
later this had already increased to
nearly 100 billion pounds the reasons
for this were fundamental the UK was
losing the competition with the highly
productive economies in Western Europe
and the low wage economies in Eastern
Europe so many believed it was better
not to compete with these countries in a
free trade zone but after brexit got
implemented in 2020 things only went
downhill in British politics former
prime minister Boris Johnson resigned
because of the party Gate scandal it
became known to the public that he broke
his own Co rules during the lockdowns
near the end of his term about 2third of
the UK's population disapproved of him
this also has an economic impact as
political instability isn't good for PR
and it didn't get a whole lot better
afterwards Boris Johnson was followed by
Liz truss after she stepped down she was
replaced by the current prime minister
Rishi sunak he doesn't enjoy good public
support with 70% of Brits having an
unfavorable view of him in part this is
because he carries the 14 yearlong
conservative Legacy with him defined by
economic stagnation recently he called a
new election to take place on the 4th of
July this is a huge bet since his rival
labor candidate is ahead 30 percentage
points at the time of writing this video
some estimate Rishi sunak chances of
winning are just
1% still it remains to be seen if a
potential labor government will do much
better for the economy it can start off
with a blank slate but it will still
face a bunch of impossible problems one
of these issues has to do with public
finances public investment by the
national and local governments is below
average compared to the UK's peers this
fits into the economically conservative
policies of the Tory governments defined
by tons of austerity measures there's
one reason for this namely High public
debt authorities have a debt reaching
nearly 100% of GDP in just 30 years the
debt relative to GDP increased nearly
fivefold as it was just 20% in 1990
during the fiscal year of 2022 to 2023
interest payments on public debts
increased to a record 111
billion with a working population of 33
million that's already more than £3,000
per worker interest payments have even
exceeded the UK's spending on its
education system when a country spends
more on debts than on education that
should tell you enough about where it's
headed this will only get worse if the
current High interest rates continue
because debt will be become more
expensive to maintain these financial
problems will force the government in
London to make some tough decisions it
can either decrease spending or increase
tax rates but there isn't much room to
do both of these things the country's
tax burden is set to hit an 80-year High
by the end of the decade jumping to an
average of
37% for the highest earning Brits income
tax is already at 45% increasing this
even further will meet a lot of
resistance however the austerity
measures of the conservative government
are also nearing their limit eight out
of 10 UK citizens think that public
services have gotten worse over the last
5 years the low budgets are having a
real effect on the quality of Education
healthc care and the justice system
recently the government published a list
of 147 State schools whose buildings are
at a risk of collapse the country's
National Health Service has a backlog of
about 7.7 million people waiting for
treatment that's one in seven people in
the entire country not being able to
receive the care they need the justice
system is in a similarly dire situation
magistrates courts have more than
300,000 criminal cases outstanding the
crown courts who are dealing with more
serious offenses are 65,000 cases behind
in short Britain's public services are
crumbling which is the result of a
decade of cost cutting the potential new
labor government will try to put an end
to this by increasing spending but
that's also not a viable long-term
solution it will have to increase taxes
even further or put on even more debt
which can lead to more problems down the
road another hardto solve issue for
British politicians is the country's
trade position in 2023 the country
imported 33 billion pound more in goods
and services than it exported Britain
has had a trade deficit every year since
1998 except for 2020 we've already
covered how this was a big reason for
leaving the EU but in order to keep
Britain's trade flowing the nation has
tried to shift its economic alliances
with other countries it might be able to
get more favorable trade deals the one
country where it set most of its hopes
on was the United States brexit
supporters said that leaving the EU
would allow for more trade with the US
negotiations for a US UK trade deal
started in 2020 but have stalled ever
since last year the two countries signed
the Atlantic declaration which improves
bilateral trade but is far from a Free
Trade Agreement the issue is that the US
doesn't have the same interests as the
UK when it comes to the partnership both
sides of the aisle in Washington want to
protect domestic Industries meaning they
don't want to open up the American
Market to foreign goods and services on
a state level however there are more
opportunities the UK has signed trade
packs with eight us States including the
second and third most populous states
Texas and Florida in total the UK has
already accessed a quarter of the US GDP
talks with other states like California
and Illinois are ongoing there are also
new trade deals with other countries
since brexit the UK has signed packs
with Canada Mexico Israel Switzerland
South Korea and turkey these agreements
largely replicate the eu's agreements
with these countries but the UK also
tries to use its independence from the
EU to improve economic ties with new
countries in 2021 it signed a free trade
agreement with Australia and in 2022 it
did the same with New Zealand there have
been years of negotiations with India
although there are no results as of yet
the two countries have similar sized
economies and they could both benefit
from Mutual trade still a possible free
trade deal between the UK and India have
been suspended until both have had
elections to sum it all up Britain is
facing a lot of headwinds if the current
economic situation continues the effects
will be dramatic the nation that used to
have an Empire where the sun doesn't set
could lose all of significance on the
world stage a Chinese Ambassador made it
very clear during an interview when
asked if China and the UK were
competitors he simply explained that
Britain is not a competitor nor an
adversary quote unquote the British
government should not overestimate its
impact on the global scene and view
Britain as a rival of China oh that's a
rude awakening
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