What Went Wrong With Britain's Economy

the UK has not had a great year with the British economy is in a recession the UK is struggling with political instability highest inflation in 40 years the British pound getting an all-time low rents are going up recession Britain is going through a deep economic and social crisis large parts of the government are unable to provide their services the economy seems to have hit the wall life is becoming increasingly difficult for a growing part of the population and the future is looking pretty grit and that's just the tip of the iceberg because the problems that the UK has did not start this year they go a lot deeper than you think and they're not gonna go away anytime soon but what went wrong how did Britain Go from an economic superpower to being called the sick men of Europe once again and how bad it really is this is the Dark Side of Britain the Fall From Grace but first let me tell you about a sponsor of this video brilliant brilliant is the best way to learn math science and computer science in an easy to understand and interactive way it has literally thousands of lessons on all kinds of topics and new ones are added every month if you're curious about how the world works from algorithms to the universe brilliant is your One-Stop shop and your favorite new destination and unlike in school brilliant explains everything in a way that you actually understand and you can learn at your own pace and whenever you want so to get started for free visit brilliant.org explained with dom or click on the link in the description you'll get a free trial in the first 200 people will get 20 off brilliant's annual premium subscription and now back to the video so while it may seem like the UK has had a pretty bad year if you take a step back you'll see that it actually had a pretty bad decade since 2008 the UK has experienced both one of the slowest periods of economic growth in its history and a decline in living standards since prices have grown more quickly than wages the average income is now lower than it was 10 years ago if you adjusted for inflation and there are other statistics suggesting that things are not going so well child poverty has increased violent crime has gone up and almost nine percent of British households are worried about having enough food which in one of the richest countries in the world is a bit strange and since 2020 this has only been getting worse as the economy is heading into a recession wages are not growing and inflation is going through the roof but how did this happen well there are three main reasons and all of them are stemming from three decisions that Britain has made in the past decades the first reason is the radical transformation of the British economy at a time time that was in many ways similar to what the UK is going through now the 1970s back then the country was crippled by waves of strikes and protests being called the sigmen of Europe and it has been in such a bad economic shape that it had to get an IMF bailout just to avoid a total economic collapse and then one of the most famous British politicians came up with a radical plan on how to turn the economy and the whole country around when she became prime minister Margaret Thatcher launched a series of major economic reforms she introduced tax cuts deregulated the whole economy and the financial markets privatized assets and companies owned by the state and encouraged people to start buying homes to boost economic activity and despite an enormous criticism that came both for the reforms themselves and for her ruthless style the reforms had results Thatcher managed to turn the downfall of the British economy around and from the late 1980s she started two decades of economic growth finally the British Bird activity basically how efficient the economy is has started going up after Decades of stagnation and the British economy started growing faster than in most other G7 countries with the Grove being driven by sectors like Finance Banking and property development that benefited from the reforms the most now not everyone was happy Thatcher was criticized for destroying the British heavy industry traditionally employing a large part of the working class and for making the economy too dependent on the financial and real estate sectors but it worked unless there was a major crisis that would obliterate the entire financial sector it didn't seem like it should stop [Music] [Music] in 2008 the UK was hit by the global financial crisis taking down all of the most important sectors and causing critical damage to the entire economy but even though Britain was not the only place that was badly hid by the crisis unlike most other countries the UK has never really recovered from that the thing is that the UK has a major problem in what's called productivity basically how much economic value people create per hour of work apart from the financial sector productivity in the UK is way behind its traditional competitors like Germany U.S or even France and it's falling behind more and more every year and so even though people in the UK worked longer hours than in most European countries dead work is far less effective and while this productivity crisis was not as important when the finance sector was booming after the financial crisis there was not much else that could replace it but it wasn't just the financial crisis but also how the UK decided to respond to it because the British reaction to the financial crisis has been quite unique and it became another reason behind many of the issues it is dealing with now after 2008 the UK government has decided to react to the situation by implementing a policy of austerity basically it's a fancy name for cutting public spending in pretty much every area in which the state spends money and on a fairly extreme level funding for the police Social Services welfare programs or local governments have been slashed and funding for other areas like healthcare or education has been basically capped at the same level since 2008. the UK wasn't the only country that restricted its spending after 2008 but there are two key differences first the cuts in public spending in the UK were exceptionally strict and second While most countries only kept their budget restrictions in place for a few years in the UK the austerity never really ended and there is a growing amount of evidence that the brutal and prolonged austerity policy has had devastating effects on the British Society especially on the working class according to the United Nations the policy of austerity has entrenched high levels of poverty and inflicted unnecessary misery in the UK especially for people with lower income the amount of people who use food banks has skyrocketed from 25 000 people to to announce million people in Twin twenty one child poverty has increased and so did the average household debt the national healthcare provider the NHS is so severely underfunded that Brits now have the worst Acts access to Healthcare in Europe and because of budget restrictions the police force has been reduced by 20 000 officers or 14 percent of the entire force making it unable to perform its duties especially in poorer areas resulting in an increase in violent crime and it doesn't look like it should end anytime soon because the government is basically starting austerity 2.0 even though the first one never ended and it's introducing more cuts to an already incredibly underfunded system of public services and so it's not surprising that everyone from nurses and doctors through firefighters and rail workers is going on strike and claiming that this is just not sustainable and finally on top of everything Britain decided to put on a master class and shooting yourself in the foot by voluntarily leaving the single biggest economic Block in the world even though Britain was promised that brexit would not damage its economy but actually help it six years later we have a solid amount of evidence that this was not true and that brexit amplifies all the economic problems that the UK is dealing with and creates a lot of new ones on top since the UK is no longer in the single European market it became much more difficult for British companies to export into the EU which is where almost half of Britain's expert goes to to sell anything from the UK to the EU is now a lot more expensive there is a lot more bureaucracy around it and it takes a lot longer and that means one of two things if you have a small company in the UK it is now much harder to expand into the EU Britain's closest and by far largest trading partner and if you have a large company it might make sense to move your business or a part of it from the UK to the EU as the European market is a lot bigger than the British one but in either case for the UK this means a lot less economic value created and a lot less money for the government in form of taxes and even those businesses that do not export outside of the UK are impacted by brexit as well especially in the form of a labor crisis since many sectors like Hospitality or construction depended on foreign labor from the EU and unsurprisingly since brexit many of those people have left and now three out of four British businesses are facing labor shortages which further slows down the economy the official British economic forecaster the government office for Budget responsibility estimates that brexit will cause the UK roughly 4 percent of its GDP or 100 billion pounds and most of that damage is still yet to come now the UK is still one of the largest and most developed economies in the world but the fact is that it's going through some really tough times and with the combination of a chronically underfunded government brexit and the current economic meltdown the future of Great Britain does not seem that great anymore

Channel: Explained with Dom

Views: 203,117

Keywords: britain crisis, uk crisis, uk cost of living crisis, uk economic crisis, nhs crisis, uk police crisis, uk government crisis, uk inflation, uk political crisis, uk economy failing, brexit failing, austerity failing, austerity 2.0

Id: d2CUDeRCerw

Length: 10min 54sec (654 seconds)

Published: Tue Dec 13 2022