Why the UK's Economy is Awful

I can't follow YouTube links as I am in company and anything with volume would be intrusive, so I am answering without having seen the video.

I do think that London steals the wealth of the country, and find it particularly galling when Londoners point out how much tax etc is paid by those living there, as (IMO) that just proves my point. You just have to look at the figures for how much investment goes into London compared to huge areas of the rest of the country. Also look at things like school achievement, unemployment and health outcomes. It's blatant and apparently unashamed.

Apart from that, there is very little geographical mobility, as house prices are so skewed to London and the SE. This has gone on for so long that whole generations are massively advantaged if they inherit. Graduates from areas outside London and the SE can struggle to find internships or to live on low salaries whilst they build careers, so again, mobility is seriously hampered, and it is not the 'best' people who get on, but those who can get a start somewhere that pays well.

'Downsizers' from London and the SE colonise whole areas where housing is still cheaper, but in so doing price out locals and make it difficult for them to 'move up' the housing ladder, as the better houses have been bought up by people selling much smaller ones elsewhere. There is no longer the chance for those with ambition to start in a smaller home then work to move up as their families grow. And don't get me started on second home owners.

Then there is the fact that groups such as the WI, U3A, local societies and so on tend to have over-representation from this who have been able to retire early because of 'downsizing', and their views on their new home towns can be jaw-droopingly patronising. Honestly, if I have listened to one person tell me how 'backward' the new town people have chosen to relocate to is in comparison to London, I have heard a hundred, and the same applies to what is left of my professional life, where the same prejudices play out in a different way.

None of it takes account of simple things like buying a council house on the Mile End Road and making a million from the sale. Or of how the fact that some people can do that, whilst others lose everything when their mother goes into care and the entire value of her house is used to pay for it means that the playing fields are not just wonky but in separate hemispheres.

Not only that, but local accents can be assumed to be inferior, and those from London and the SE as 'posher'. Seriously, more than once I have had Londoners with Eastenders-type accents tell me that they have been deferred to because they speak differently from locals. It's as though a London accent is classless and neutral, and people are assumed to be 'yokels' in their own home towns.

Added to all of that, if someone like me speaks out (as in this post) we are accused of having chips on our shoulders.

I am far from being at the bottom of the privilege pile by any sensible standards, and am very aware of that, so don't want to appropriate anyone else's situation. There will be worse things than house prices, career opportunities and so on that I haven't mentioned as it would be inappropriate to do so (obesity, benefit dependency, addiction for instance), and if anyone suggests that my rant was inspired by the 'politics of envy' I will explode. There is such a thing as politics of fairness, too.

Is nobody else interested? I do wish GN had the same respect shown to our posters as MN, so I could have deleted my post if it were seemingly ignored for so long.

I have had enough of this site for so many reasons now.

Rich foreigners do make us poorer because we encourage them to buy up all our assets, even our core industries and utilities. The reason is that we are too lazy to take advantage of the opportunities and invest in our own future. It’s not because it’s London or SE it’s because that’s where the money is and the streets are paved with gold if you are smart enough

Why are we surprised when they take their profit away with them, it’s going to get worse because Trump has just promised hundreds of billions of investments in the UK, yes we get some benefit but they will take away the profit

I'll try and add my bit because I am interested.

I started the video, but it was too much from an an American perspective for me to continue watching. Sorry.

However, in the intro there was a Renaissance or 18th century painting of I assume London (??) people partying. A cello is in the foreground. It got me thinking a bit about your comments, Doodledog, because throughout time London has been a draw to successful musicians and artists from around the world. They mainly chose to settle in London and therefore enrichen society in the area.

What I'm sort of saying, is that it was forever thus.

PS. the scruffy rundown town shown in the clips is actually Jaywick isn't it, which is only an hour and a bit up the road from my part of London, so very much South East.

I think much/most of what you say is in the video Whitewave. I'll try and postvthe text (in parts).

Intro: Why the UK's Economy is Awful

London is rich. The rest of the UK is poor.

The UK has 215,700 millionaires, 516 centi-millionaires and 45 billionaires. But outside of London, life looks very different. Citizens of the United Kingdom now have less disposable income than the poorest 5 US states. Life expectancy in parts of Blackpool is lower than in Rwanda. And if you remove London and the Southeast, the country’s GDP per capita drops by 14%.

How did Britain go from the greatest empire on earth to a divided, hollowed-out nation?

In the 1980s, Thatcher’s policies crushed manufacturing towns, gutted industry, and turned London into a financial superpower while the rest of the country collapsed. Housing in London became unaffordable for ordinary people, with the Right to Buy policy wiping out social housing and foreign billionaires buying up the city. At the same time, government spending on transport, infrastructure and R&D overwhelmingly favored London, starving the rest of the country of investment.

The United Kingdom is now a country where London eats Michelin star meals while the rest of Britain scraps for leftovers. Until prosperity is spread beyond the capital, Britain’s decline will only deepen.

This is The Divided Kingdom.

It's a shame you didn't continue watching escaped. It's 17 minutes, but it was all relevant to anyone from a UK perspective. It explained in straightforward terms for non- specialists how economic decisions from 1979 have affected living conditions for most in the UK. These are the reasons future historians will be able to list as the reasons for the rise of Reform.

Unfortunately I don't have even 17 minutes today, I'm heading back to the uk after a longish absence.

escaped

Unfortunately I don't have even 17 minutes today, I'm heading back to the uk after a longish absence.

We all have days like that. All I was saying was don't dismiss it because the presenter has a foreign accent. If you are interested in British economic history and want some facts, it's a good watch for a basic understanding.

I feel Dd’s frustration.

There is nothing new about the content of the video. People have been pointing out this for at least the last decade or more. It has been brought up on Gnet a number of times and produces very little interest, or descends into a discussion of posters’ personal circumstances, mostly to oppose the idea that there is anything wrong with the current economic system (which has been dominant for the past 40+ years).

I’ll be interested to see if this thread is any more productive…

Inequality
Our story starts in 1979. Margaret Thatcher is elected Prime Minister with the goal of controlling inflation in the lead up to her election.

Inflation had spiraled out of control. £100 in 1970 was worth over £300 by 1979. But what caused this? First, the 1970s were rocked by two massive oil shocks when OPEC doubled and then tripled oil prices. Everything from gas to groceries got more expensive overnight. At the same time, wages kept rising as powerful trade unions demanded more pay to keep up with the rising prices, creating a vicious cycle of rising prices, leading to rising wages, leading to rising prices, and so on. Add to this loose monetary and fiscal policies leading to tons of money floating in the economy, and you have a recipe for disaster.

Guided by Chancellor Geoffrey Howe and hardline monetarists like Keith Joseph and Alan Walters, Thatcher had made inflation enemy number one. To fight it, her strategy was simple. First, reduce the money supply. The Thatcher government set out to strangle money supply, cutting sterling M3 growth from 12% a year to just 6% by 1984. Second, interest rates. In June 1979, she increased rates from 12 to 14%. Then again to 17% in November, the highest in the history of Britain. The idea was simple enough. Make borrowing expensive, slow down credit and choke off inflation. Although this helped stamp down inflation, a stronger pound made British exports uncompetitive abroad, while sky high borrowing costs crippled businesses at home. Manufacturers couldn't invest, couldn't expand and in many cases couldn't even keep the lights on. And the third thing was government spending. The Thatcher government aimed to cut public sector borrowing requirement from 4.7% of GDP in 1979 to just 1.5% by 1983. Concurrently, while in the middle of a recession, they did the unthinkable. They raised taxes, but Britain was already in trouble. More than 2 million people were out of work, and every month another 100,000 were joining the unemployment lines. It was so shocking that 364 economists signed a letter to The Times, saying the policy had no basis in economic theory.

So the question was, did it work.

Well, yeah. Although extreme, inflation decreased from 13% in 1979 to 5% by 1983. But at what cost? High interest rates, a strong pound and spending cuts crushed manufacturing towns across the United Kingdom. Britain's industrial base was gutted and regional inequality began to take shape.

Meanwhile, London was living a very different story, predominantly a service based economy. London, unlike much of the UK, was able to hold on. By the mid 1980s, joblessness in northern England, Scotland and Wales all pushed past 15%. While the Southeast and London stayed under 10%. But why was this the case?

Enter the Big Bang Deregulation package. Thatcher had a vision of transforming London into a financial superpower. Through deregulation, fixed commissions and exchange controls were scrapped, the single capacity rule ended, foreign ownership welcomed and electronic trading unleashed.

The result? International banks poured in £450 million into the city. 1500 new millionaires were minted and London cemented itself as the world's dominant financial center. On paper, the UK looked like it had gone through a renaissance at the end of Thatcher's first year in office. GDP was around 1 trillion Great Britain Pounds. But when she left in 1990, it was 1.4 trillion GBP. GDP per capita also rose from £15,500 thousand to £19,900 thousand by 1990. Britain was richer. But this data doesn't show the whole picture.

During the same period of time, the Gini coefficient, a measure for inequality, increased from 25 to 35, meaning while GDP per capita rose by 30%, inequality rose by 40%. So although Britain was richer, it was becoming more unequal. This was partly due to the extreme cost of Thatcher's policies on Britain's industrial base.

For example, in 1979, manufacturing accounted for nearly 30% of the UK's GDP. And by 1990 it fell to 16%. Concurrently, manufacturing employment fell by nearly 40% from 1979 to 1993. So yes, GDP rose. GDP per capita increased. But if you didn't live in London, it wasn't so obvious. The services industry grew, but other industries declined as the UK wanted to rejig its economy.

Another way to examine the impact of shifting industries is the relationship between direct and indirect jobs created. Basically, if you open a factory selling widgets, you might hire 100 people directly. But to make your widgets, you need steel or electricity and distributors and more. Your factory, therefore, might support an additional 300 indirect jobs, giving a ratio of one direct job to every three indirect jobs. If we look at banking, the total is around 200 indirect jobs per 100 direct jobs. A ratio of 1 to 2. But if we look at iron manufacturing, the total is over 900 indirect jobs per 100 direct jobs. A ratio of 1 to 9. In fact, if we look at the financial services industry broadly, the ratio is around 1 to 3.6, which sounds great, but when you compare it to other industries like utilities, durable manufacturing and non-durable manufacturing, it isn't. And this is one of the reasons that service based industries lead to higher GDP, but increase inequality as earnings become more concentrated among a smaller group of individuals.

But this isn't simply about job creation. It's also about wages and benefits. Manufacturing jobs tended to be characterized by formal employment agreements with strong benefits, retirement plans, paid holidays, insurance, and sick leave. Alternatives for the majority low skilled manufacturing workforce did not have these characteristics. As such, studies show that the shift away from manufacturing led to an increase in inequality. And as a reminder, the UK's industrial base is deeply regionalized.

So although there might be jobs and wage growth in the South, pockets that historically relied on out-of-favor industries became hollowed out. And today not a single region in the UK north of London has a GDP per capita higher than the UK average.

Let that sink in. That means that every region in the UK, excluding London and the southeast, is poorer than the average of the UK.

I'll do subsequent parts later but this us very time consuming and I need to do other things right now!

MaizieD

I feel Dd’s frustration.

There is nothing new about the content of the video. People have been pointing out this for at least the last decade or more. It has been brought up on Gnet a number of times and produces very little interest, or descends into a discussion of posters’ personal circumstances, mostly to oppose the idea that there is anything wrong with the current economic system (which has been dominant for the past 40+ years).

I’ll be interested to see if this thread is any more productive…

It's frustrating when green or white trouser suits generate hundreds of comments.

DaisyAnneReturns

I'll do subsequent parts later but this us very time consuming and I need to do other things right now!

I appreciate what you've done.

Doodledog

Is nobody else interested? I do wish GN had the same respect shown to our posters as MN, so I could have deleted my post if it were seemingly ignored for so long.

I have had enough of this site for so many reasons now.

To be fair you posted above that you couldn’t open the link because you were in company.
Don’t you think others might be involved in other pass times other than reading GN 🤷‍♀️

"London eats Michelin star meals, while Britain scrapes for leftovers" Oh come on, what sort of exaggeration and generalisation is this are all Londoners living high on the hog? you don't think perhaps there are a multitude of Londoners barely getting by and swathes of deprivation experienced by other provincial cities.

London has always been a mecca for foreigners, it's a very cosmopolitan city. I grew up just outside of London, so possibly I took it for granted we don't analyse where we're born. Three out of four of my grandparents were either foreign born or from immigrant stock only one was English. Why did they find themselves in London, presumably because it presented opportunities.

As far as housing is concerned, most people don't live in the city it's unaffordable and like members of my family have had to go out 40 plus miles or so and commute in, packed like cattle into dirty trains, subject to umpteen cancellations for which they pay a fortune for the privilege.

Maybe if Labour stopped choosing their top strata from the out of touch London elite, Islington based Milliband why is he not up in Doncaster with his constituents? or Emily Thornbury who tried to muscle her way in again for deputy, Keir Starmer himself educated at Reigate Grammar, Reigate being an archetypical leafy upmarket Surrey town if ever there was one, yes I know it was a state grammar back then. There are and have been too many politicians rooted in the south who don't represent the regions. Having said that there's a lot of finger wagging at those of us in the south east who were born and bred here as if we chose all that for ourselves.

The next parts are Housing, Neglect and Decline.

It's frustrating when green or white trouser suits generate hundreds of comments.
I can do both discussions!

Maybe if Labour stopped choosing their top strata from the out of touch London elite.

There are currently 22 MPs who are cabinet ministers, of whom 17 represent constituencies outside London.

www.gov.uk/government/ministers

escaped

^It's frustrating when green or white trouser suits generate hundreds of comments.^
I can do both discussions!

I thought you were busy getting ready to return to the UK. That video is only 17 minutes.

London eats Michelin star meals, while Britain scrapes for leftovers.

Just a quick observation here; fine dining exists in London because excellent chefs, even from the French provinces, have been drawn to London for decades to practise their Art. I'm not saying it's right, just saying that the capital is a mecca for all sorts of industries which are sustained by the folks who live there and spend money. Catch 22.

I agree this is nothing new Maizie, certainly not to you, me and others. But if one person grasps it for the first time, or it fills out their knowledge, then it's worth our time posting and discussing it.

sunami

escaped

It's frustrating when green or white trouser suits generate hundreds of comments.
I can do both discussions!

I thought you were busy getting ready to return to the UK. That video is only 17 minutes.

You make me laugh!

It's not clear to me that Mrs Thatcher ruined the UK's rust belt industries. Surely the decline was brought about by the rise of Chinese and Indian manufacturing which could make products more cheaply than the UK. That still seems to be the case. One underlying problem has been the reluctance of UK governments to invest in new industries, probably because most politicians and civil servants lack scientific understanding. Also the willingness of governments to prop up failing industries for Party political reasons.

I can’t quote you petra, but no, of course I don’t think that people have nothing better to do. I was simply pointing out that video is not the best way of getting information to everyone.

Speaking only for myself m, I can easily read from links, but can only watch video when I am on my own, and don’t always remember to do so. Others’ mileage will, of course, vary.