Why UK 🇬🇧 is going Bankrupt? : Detailed Economic Case Study

hi everybody the United Kingdom was once the symbol of power and Heritage because of their 200 years of looting colonies like India the West in its predatory form came into India uh in the mid 18th century but in spite of all the treasure hunting now the UK is going through the worst economic and social crisis in its history as of 2024 while the debt level of Germany stands at 63. 7 4% of its GDP Ireland stands at 42. 5% India stands at 58.

2% whereas the UK debt stands at 99. 5% of their GDP and you know what's even more worrying while in other countries the workforce is getting bigger and bigger in the UK people are leaving the workforce due to long-term sickness at the same time UK's productivity has remained stagnant since 2008 crisis the hospitals are falling short of nurses and 45% of the patients have have been waiting in an emergency for 4 long hours and today there is such a big labor shortage that UK has a shortage of more than 100,000 truck drivers and all of this put together UK is seeing the sharpest increase in absolute poverty in 30 long years prices are rising and it hurts inflation above 11% that is clearly the highest figure in 40 years can't raise taxes can't really let debt go much much higher 2 million people in the UK go without food for at least one day in a month and if you remove London from the UK the country is as poor as Mississippi which is the poorest state of America so the question is how did UK's economy fall into such a terrible situation what are the biggest mistakes that UK made which caused this massive economic crisis and lastly what are the lessons that India needs to learn from the fall of UK's economy is the Great Britain really that great the United Kingdom it is sliding into a recession more people in the UK were pushed into poverty from great hikes the economy is shrinking and the latest economic data does not look good the UK's cost of living crisis will cause thousands of premature death this video is brought to you by scaler School of Business you can learn how to become a brilliant business leader with scaler School of Business the best part is that they have scholarships up to 100% if you register are using the link below people India's education system is so messed up that even after studying for 4 years 35% of our engineers and 30% of our MBA grads are unemployable but here's where scaler School of business is revolutionizing business education in 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founding cohort starting early September 20124 the best part is that they have scholarships up to 100% if you register using the link below so if you want to become a brilliant business leader apply for scaler School of Business using the link in my description and in my comments section and now on with the episode this is a story that dates back to 2016 and this is when UK decided to exit the European Union so on 23rd of June 2016 in a special election called the referendum the people of United Kingdom voted to leave the European Union by a 50 to 48 vote share and this is where the chaos in the economy started with something called brexit the UK has voted to leave the European Union we we on our country back the vote LEF side um presented a very optimistic view of what the British economy would look like after brexit now before we dive into brexit you need to understand a very very important part of history and that is the formation of European Union long story short after the World War II ended the leaders of European countries realized that if they act as individual countries and if they compete with each other or fight with each other they'll be wasting a ton of money and a ton of Manpower and if you look at the map of Europe you will see why it makes sense look at this guys the European countries are so small that if every country had to spend on Military to guard their borders it would be very costly right similarly if a country like Hungary wants to trade with the world it would be a landlocked country with no access to Sea at all so if they wanted access to the North Sea they would have to pay taxes to Austria and Germany because they would be using their land so in this futile race of defense and trade taxes none of the countries would have progressed well at all this is the reason why in 1952 six countries Belgium France Germany Italy Luxembourg and the Netherlands they all decided to take their economic relationship to the next level by forming something called the European coal and Steel Community and this gave them some incredible advantages for example when France needed lots of coal and steel Germany offered steel and coal to France to help them in postwar reconstruction similarly Germany was able to sell its coal and steel to other members and it was able to make a profit with steel products to develop its economy and to decrease its debt similarly countries like Italy Belgium Netherlands and Luxembourg they were able to get access to countries with a larger population like Germany and France so all of these put together the businesses in these countries got access to six countries with no taxes or opposition this is how a small Union of countries benefited by sharing both resources and access and this Union was so so successful that more and more countries started to join this Union and fast forward to today it is a union with 27 member countries this is how ladies and gentlemen in 1993 this Union evolved to become one of the most powerful unions in the world which we all know today as the European Union and all these countries got three major superpowers by joining the European union now listen to this very very carefully because Here's Where the Heart of UK's economic crisis lies the first superbar that these countries enjoyed was the superpower of EU citizenship which means all the citizens of European Union could move and reside freely in any European Union country secondly in the European Union Goods services and capital could move across National borders without any barriers so a Furniture businessman in Greece could sell his furniture in the UK and there was no extra tax and no trade regulation and lastly for the small countries the European Union gave an unfair advantage of trade negotiation for example imagine if a small country like Hungary and a giant like India sit at the negotiation table now you tell me who will have an upper hand in this negotiation India has a population of 1. 4 billion while hungary's population is only 10 million so if we sit down for a bilateral trade agreement we could tell Hungary that we will give your automobile industry an access to a population of 1.

4 billion if you reduce your import taxes by 25% but Hungary will have to decrease the import Duty on Indian automobile by 50 % why because we are a bigger country and we can exploit a small country because we are giving them access to a much bigger Market but you know what guys here's where the European Union came in and they said instead of an individual country bargaining with India the entire European Union will sit down with India to negotiate so now the European Union is sitting down as a single entity with a population of 447 million people and this makes them so so powerful that while India has a population of 1. 4 billion people and a per capita income of $2,700 EU as an entity comes with a population of 450 million people and a per capita income of $52,000 so now do you realize when European Union as a giant entity sits at the negotiation table with India the EU has a much better bargaining power against India even though India has a population of 1. 4 billion so this is such a fantastic Arrangement isn't it every country gets better negotiation power better citizen Freedom better relationship with European powers and most importantly you get Market access to a much wider population as compared to your own country then the question is why did UK exit the European Union well out of the many many reasons here are three of the most important reasons why the United Kingdom exited the European Union the first reason was that UK thought the European Union benefited more from UK then UK benefited from the European Union for example between 2012 to 2016 the average volume of fish caught by the European Union fishermen in British Waters was 760,000 tons per year whereas the British fishermen caught only 990,000 tons of fish in the EU Waters which was eight times less than European Union similarly in 2013 UK's gross contribution to the European Union budget was around 17 billion e whereas this received back only € 6.

31 billion e now if you look at the net contribution of UK it turns out to be 10. 76 billion e right so if you see there was a huge disparity in budget contributions among the European Union states so this is the reason why the Brits felt like they were being robbed by the European Union how ironical isn't it for a change the Brits felt like they were being robbed if you know what I mean that is hilarious the second thing that bothered them was immigration so while the European Union expanded several countries like Poland Czech Republic and Hungary got in and because citizens could move across borders many people started coming from less developed countries into the United Kingdom and foreign population almost doubled from 5. 3 million in 2004 to over 9.

5 million people in 2021 which was about 12% of the entire population of UK so the Brits felt worried about foreigners entering their land again how IR chronical isn't it the Brits were worried about foreigners coming into their country this drastically increased strain on public services and housing lowered wages of workers because of over supply of labor and eventually it decreased job opportunities for their own citizens this was the third problem that UK had and lastly the United Kingdom felt that they could easily negotiate better deals with countries like India rather than the European Union doing it for them these are the reasons why they decided to conduct a referendum to opt out of the European Union so after the referendum of 5248 finally brexit happened on 23rd of June 2016 but but but as it turns out as of now things are not going well for UK at all and this is what the situation in UK looks like the picture across England is not much better food prices SAR 13. 6% in the last 12 months and record housing costs of piling pressure on UK households to the question over here is what on Earth went wrong with brexit and why is UK in such a terrible situation well the first major hit that the country faced was trade if you look at the stats you will realize that European Union was one of UK's largest trading partners as of 2022 while UK exports to EU accounted for 42% of all their exports UK imports from the European Union was 48% of all UK Imports so you can imagine how much the UK dependent on the European Union for trade but after brexit the UK was no longer a part of the Customs Union which allowed them the flow of goods and services among the EU countries without any import Duty or customs duty so after brexit UK Goods got taxed while moving to every country in the European Union so to solve this problem Yuki thought they could simply sign something called The Free Trade Agreement for those who don't know FDA or Free Trade Agreement is when two or more countries agree to trade with each other with no taxes or very less taxes so the UK thought they could sign the free trade agreement with the European Union countries and they could easily trade with each other without immigrants without contribution to the EU fund and without allowing other European countries to exploit the UK but you know what guys here's where the UK economy faced a big big problem and this is a problem that even India is facing in 2024 so the question is what is this problem ladies and gentlemen this problem is that UK and India both are not manufacturing driven economies we are service driven export economies so we don't make most of our money by exporting products but by exporting our services while the UK exports Financial Services India exports IT services so the question over here is why is a service-driven economy so so dangerous and why is manufacturing better for India and UK right now well there are three simple reasons number one manufacturing Industries can provide way more employment as compared to service Industries and this is for both skilled as well as unskilled people for example while the IT industry constitutes 7. 5% of our GDP the textile industry barely accounts for 2.

3% of our GDP but if you look at the employment that they provide the numbers are staggering on the outside if I asked you which sector would recruit more people what would you say of course the IT industry employs more people right because their contribution is almost three times as much as the textile sector but you know what guys while the IT services industry of India employs 5. 43 million people our textile industry employs 45 million people and while the IT industry mostly recruits only skilled people the textile industry employs millions of unskilled people along with the skilled people so the manufacturing sector provides way more employment opportunities as compared to the service sector secondly while the service sector is grown to more economic shocks the manufacturing sector is relatively shockproof for example during the 2008 recession while the financial services industry and the marketing Services took a massive hit companies like nesle Proctor and Gamble and uni liver they were not as badly affected because while the people could cut down their spending on financial and marketing Services they could not cut down on Essentials like razors detergents and baby foods and lastly while manufacturing is easily scalable to increase exports scaling a service company is very very difficult for example if I have to increase the production of iPhones from 10,000 to 20,000 units I can recruit train and deploy people within a few weeks and on top of that all I have to do is get new machines and run at higher capacity but if I have to go from 20 to 30 clients in my financial services business it is very very difficult and by the way guys unless you an entrepreneur you can't understand the pain of what I'm saying so if you can't understand this context of the pain of expansion just talk to any service industry business owner and they will tell you everything so long story short the manufacturing sector has three major advantages over the service sector and these advantages revolve around employment scale and resistance to economic shocks but now if you look at UK's economy 81% of UK's GDP is dependent only on services and if you see their production it has been stagnant for over a decade and this is the reason why ladies and gentlemen two things happened when the service industry had to comply with 27 different countries for legal and financial services after brexit the service industry of UK got disrupted on top of that they saw two major crisis with covid and the Russia Ukraine war it's been revealed covid-19 has dealt the UK's economy its biggest blow in more than 300 years the office for National statistics has revealed the pandemic led to a 99.