This time the UK’s decline is real

We’re becoming the new Italy

This morning the UK commentariat is finally catching up with a grim argument among economists about Britain’s decline, which I covered a year ago.

The stagnation is captured in one graphic which the Financial Times reran this morning.

It shows that real gross domestic product per head was 28 percent below what it would have been if the rate of economic growth before the 2008 financial cries had continued. As living standards have stagnated, public services have grown ever-more dilapidated even as taxes have risen to historic highs  

It’s a grim picture. The UK the first country in world to have an industrial revolution is now in its worst economic decline since the industrial revolution of 250 years ago.

Below is the piece I wrote about the crisis last year, which remains one of the best-read on this site. It’s for paying subscribers. (If you sign-up, you will have access to all articles, archives, debates and podcasts, and there is a free trail for the faint hearted.)

If you read to the end, you will see I quote the excellent advice of the American economist Brad DeLong that Labour should look at what the Tories did and do the exact opposite.

So we should reverse austerity, re-progressivize taxes, and rejoin the European Union.

Labour, of course, remains so frightened it will not commit to any radical programme, which leaves me wondering what kind of future this country has.

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The UK: Slowly sinking into the sea

(Published January 2023)

What follows is the best account I can give of a discussion among economists on the fate of the UK. It has not broken though into the mainstream media, despite being a matter of national urgency.

Economic historians look at Britain’s dismal performance, and say that the UK has seen nothing like it since the industrial revolution. We are not merely in relative economic decline against our competitors – we’ve experienced relative decline since the late 19th century – but in a period of stagnation of such length and severity that we are decoupling from the rich world.

Unless current trends are reversed, the UK will become like Argentina and Italy[i]: a country that was once was prosperous, and might have been more prosperous still, but lost its way.

You do not need to be an economist to feel our decline. You see it in the shabbiness on the streets, the worn faces and clothes of passers-by, the frustration and disappointment of the young, the ambulances unable to discharge the sick and the dying, the pound shops and charity stores, the befouled rivers and beaches, the creaking criminal justice system, the inability to build anything from homes to a railway line, and above all in the decline in living standards.