How the UK is becoming a ‘third-world’ economy

[Music] London the City of Drams and one of the wealthiest urban areas in the world its economy is worth roughly 58 billion which equals $652 billion if it were an independent state London would rank as the 22nd largest economy in the world precisely above Argentina and Sweden however London's prosperity and that of Southeast England is atypical for the country this small area makes up nearly half the UK's GDP while having about a third of its population if one were to amputate London's output it would reduce British living standards by 14% just enough to slip ahead of the US state of Mississippi yeah the UK has seen better days the last 10 years have been particularly tough real disposable income which is income after taxes and benefits has remained almost unchanged the cost of goods and services has gone up compared to a decade ago people can buy less with their income meanwhile productivity is low one of the lowest of any major economy and housing has become nearly unaffordable with the UK holding the record for the highest number of homeless people in the developed world the cause for these issues is rooted in past political decisions Britain has slumbered and stumbled its way through a number of setbacks now the crisis has become endemic with no quick fix in sight when you think about it it's ironic the UK was the first country to industrialize now it stands to become the first to de-industrialized seen from a larger angle Britain's economy is on a downward trajectory prices are rising too fast just recently housing prices Rose by more than 2,200 in a month unfortunately this wasn't widely reported in the media looking at things from all angles is what we do and ground news provides us with invaluable insights to do exactly that that's why we reached out to them to sponsor this video in fact reading this on ground news I can see only 10 sources covered it which goes to show how overlooked this subject is what's more less than 10% of the outlets were from government sources one might suppose governments don't want to talk about complications at home now our type of content is not really suitable for YouTube the algorithm deems it too controversial and so many of our videos go without monetization that's why we rely on sponsors to keep producing these videos we've personally used and worked with ground news for years and they've stepped up every time we needed support in fact we have our own feed on ground news here you get breaking news on geopolitics and even blind spot stories that the media isn't covering our missions are line so I encourage you to check it out at ground. news/ Caspian I recommend subscribing to the Vantage plan our link gets you 40% off keep in mind that by subscribing you are directly supporting our Channel not long ago Britain was considered one of the world's most prosperous Nations and a prime destination for skilled professionals seeking to advance their careers today not so much the state is under incredible socioeconomic strain more so than people realize three backto back geopolitical shock waves have left it with a colossal debt brexit Co and the Ukraine war the Catalyst however dates to 2008 when the financial crisis introduced longlasting effects like everyone else Britain was deeply injured but the way it handled the Fallout set it apart from the rest of the developed world after borrowing roughly 141 billion pounds to bail out British Banks the government opted for austerity measures instead of investing in fiscal and social policies there were no significant tax cuts or minimum wage increases there was no inflation control no housing assistance no job creation programs you get the point for ordinary citizens the consequences were devastating real household income dropped and then flatlined for the next 15 years in economic terms this is known as a lost decade for added perspective in 2007 the average British household was 8% less prosperous than those in Norway and just 6% behind those in the United States in the Years following the deficit grew substantially today British households sit 20% behind Norway and 16% behind the US in terms of real income this drop in living standards is felt vividly among the middle class real household income is a fundamental driver of economic activity it encourages consumer spending and improves living standards all of which contribute to economic growth in Britain however the government prioritized corporate interests Above All Else But even here in the corporate world the gains were mostly shortterm the productivity rate was left on the back burner and no significant Investments were made in this domain for context increasing productivity is one of the most efficient ways to grow an economy but contrary to popular belief improving productivity does not mean working harder instead the point is to boost economic output without increasing the amount of work so when an agriculture driven economy switches to manufacturing microchips productivity increases because the tech industry is more profitable and has greater margins Ergo the workforce is getting more out of it for the same amount of Labor that's why Japan is turning Farmland into factories it adds to productivity and ultimately improves the economy in the UK productivity output per capita debilitated after the 2008 crisis due to a lack of investment this chart by the London School of Economics puts things into perspective before the crisis productivity was growing at near nearly 2% annually after the crisis however it weakened substantially changing a trend that had been in motion since the 1980s the British Workforce now has the second lowest productivity rate among the G7 economies whereas before the 2008 crisis it was second only to the US the simultaneous effects of sluggish real household income and low productivity explain a lot about the performance performance of the British economy it is essentially fighting for its life Britain's lost decade happened so casually so indifferently that none of its political parties acknowledged it let alone addressed it there was no political discourse on this subject that was affecting millions of households but it was a crisis nonetheless and so the discourse expressed itself in the form of brexit however the uncertainty over brexit made a bad situation even worse it had a particularly sharp effect on Direct foreign investment according to the bank of England brexit reduced investment by 25% measured from 2016 to 2021 what's more soon after brexit the onset of covid exacerbated the economic crisis that was brewing underneath the government stepped in and borrowed an additional 280 billion pounds in its response to the Corona virus this was deemed necessary to get the nation through the pandemic but here's the thing most of the covid bailout was borrowed when interest rates were at historic lows sitting around 0. 1% at the time repayments were expected to be relatively manageable and this might have been true were it not for the final nail in in the coffin the Ukraine war the minute the Russians began their full-scale assault access to Russian oil and gas was halted by sanctions and trade restrictions at the same time an energy crisis started brewing and the cost of living jumped across Europe the crisis hit close to home British households were projected to pay three times the previous price just to heat their homes during the winter much of the public was anxious so the British government intervened again this time it was one of Europe's most generous in financial support between 60 billion and 100 billion in additional spending went straight into Britain's debt the damage to households was mild but the bailout gave the UK its biggest increase in debt as a share of its GDP the synthesized pandemic crisis and energy crisis pushed inflation rates to new highs in response central banks ramped up the interest rate for ordinary citizens this meant that mortgage payments went up overnight by hundreds of pounds meanwhile for the government the high interest rate added additional billions to the national debt while before debt repayments were believed to be relatively manageable after the energy crisis debt became increasingly expensive to pay off servicing debt jumped from 4 £40 billion per year to about 100 billion per year that is a staggering 60 billion increase in spending which is nearly the entire British defense budget so yeah although admirably Britain's support to Ukraine essentially broke its economy Britain's debt interest bill is now the country's second largest item of spending the surge in debt has reduced available funds by tens of billions of pounds limiting spending on other items nearly all the country's public services are affected by it which then depreciates the quality Public Services can provide at its core economics is about more than markets and money alone it is about understanding the choices people make and how demographics drive those decisions economics is essentially the study of people not just numbers after the co lockdown subsided and life returned to normal every Advanced economy witnessed a surge in the workforce people found jobs and moved on with their lives this chart shows the change in economic activity among the G7 Nations between 2019 and 2023 Britain stands out it's Workforce never recovered it just stayed low a smaller Workforce has also sorts of Ripple effects it means less taxes to pay for services like health care and greater expenditures on social benefits it also means people have less money to spend which hurts businesses and affects the number of jobs available in an economy so the consequences Go full circle but Britain's Workforce problem goes much deeper than the missing 1% officially unemployment in Britain is low by historical standards sitting at 4.

4% which amounts to 1. 5 million people but reality paints a different picture Britain's Workforce is missing a staggering 11 million people the government doesn't consider it unemployment though calling it economically inactive instead the reasoning is that this group amounting to 9. 4 million people is technically not looking for work or is available to start a job the office for National statistics explains the motives about 2.

1 million aged between 16 and 24 are students and thus economically inactive about 3.