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The last few months have been difficult for the UK. Energy prices are rising. National inflation has crossed double digits. Britain's longest-serving queen has died.
The new prime minister resigned only 45 days after taking office. British news is covered fairly well (some might say too much) in the American media. Behind the grim headlines is a deeper story of decades of economic dysfunction that serves as a lesson for the future.
In the American imagination, Great Britain is not only our political parent but also our cultural partner, a wealthy nation that gave us modern capitalism and the Industrial Revolution. But the figures show that Britain is pretty poor for a rich country. Living standards and wages in the UK have fallen significantly behind those of Western Europe. By some measures, in fact, real wages in the UK are lower than they were 15 years ago and are likely to be even lower next year.
This phenomenon has been going on for decades now. After the Second World War, Britain's economy grew more slowly than that of most of Europe. In the 1970s, the British had a national debate about why they were taking steps backwards and how the former empire had become a relatively isolated and sleepy economy.
Under Prime Minister Margaret Thatcher in the 1980s, markets were deregulated, unions were destroyed and the financial sector emerged as a crown jewel of the British economy. Thatcher's injection of neoliberalism had many compounding effects, but from the 1990s to the 2000s, the British economy experienced huge growth, with London experiencing the highest financial boom.
When the global financial crisis hit in 2008, it hit the engine of Britain's economic growth. Wary of rising deficits, the British government pursued an austerity policy, worrying about debt rather than productivity or aggregate demand. The results were disastrous. Real wages fell for six consecutive years.
In the last 30 years, the British economy chose finance over industry, the British government chose austerity over investment, and British voters chose a closed and poorer economy over an open and richer one.
Thus Great Britain, the first nation to industrialize, was also the first to deindustrialize. Britain sparked the productivity revolution that changed the world and now it has some of the worst productivity statistics of any major economy. What was once the most powerful globalized empire in the world has now voted to explicitly reduce global access to trade. Since Brexit, immigration, exports and foreign investment have all fallen, likely reducing the size of the UK economy by several percentage points in the long run.
www.voxnews.al
The new prime minister resigned only 45 days after taking office. British news is covered fairly well (some might say too much) in the American media. Behind the grim headlines is a deeper story of decades of economic dysfunction that serves as a lesson for the future.
In the American imagination, Great Britain is not only our political parent but also our cultural partner, a wealthy nation that gave us modern capitalism and the Industrial Revolution. But the figures show that Britain is pretty poor for a rich country. Living standards and wages in the UK have fallen significantly behind those of Western Europe. By some measures, in fact, real wages in the UK are lower than they were 15 years ago and are likely to be even lower next year.
This phenomenon has been going on for decades now. After the Second World War, Britain's economy grew more slowly than that of most of Europe. In the 1970s, the British had a national debate about why they were taking steps backwards and how the former empire had become a relatively isolated and sleepy economy.
Under Prime Minister Margaret Thatcher in the 1980s, markets were deregulated, unions were destroyed and the financial sector emerged as a crown jewel of the British economy. Thatcher's injection of neoliberalism had many compounding effects, but from the 1990s to the 2000s, the British economy experienced huge growth, with London experiencing the highest financial boom.
When the global financial crisis hit in 2008, it hit the engine of Britain's economic growth. Wary of rising deficits, the British government pursued an austerity policy, worrying about debt rather than productivity or aggregate demand. The results were disastrous. Real wages fell for six consecutive years.
In the last 30 years, the British economy chose finance over industry, the British government chose austerity over investment, and British voters chose a closed and poorer economy over an open and richer one.
Thus Great Britain, the first nation to industrialize, was also the first to deindustrialize. Britain sparked the productivity revolution that changed the world and now it has some of the worst productivity statistics of any major economy. What was once the most powerful globalized empire in the world has now voted to explicitly reduce global access to trade. Since Brexit, immigration, exports and foreign investment have all fallen, likely reducing the size of the UK economy by several percentage points in the long run.
Analysis/ How did Great Britain become one of the poorest countries in Western Europe?
Destroyed British flagThe last few months have been difficult for the UK
www.voxnews.al
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