Putting Britain’s decline into perspective

Economic panic is rather like moral panic, only with slightly less hysteria. We’ve had economic panics for years but, since the financial crisis, they seem to be getting louder and more frequent. Not only is the country going to hell in a handcart because of loose morals, it is also well on the way to becoming an economic basket-case because of government overspending, lack of investment, too much regulation, too little regulation, too much welfare, inflated wages, the City sucking the blood out of the economy, crap transport, poor education, idiotic trade unionists, idiotic managers, the European Union, hard-working foreigners under-cutting British workers or lazy foreigners scrounging benefits. Whereas moral panics tend to be a right-wing phenomenon, economic panics are fuelled by both right and left in an attempt to prove that it is the other lot’s policies wot done it.

So the publication last week of a projection by PwC which showed the UK sliding down the economic league table, to be overtaken by Brazil, Mexico and Indonesia by 2050, was grist to the mill. PwC’s press release claimed that, unless the UK gets its finger out and breaks into new markets, it risks ‘playing in the slow lane of history‘. This prompted ‘We’re buggered’-style headlines in newspapers on both the right and the left

The report itself, though, is less sensationalist and the figures tell a slightly different story. As this graphic from the Guardian data blog shows, all the European countries, even Germany, are projected to fall behind too. The UK’s position relative to France and Germany remains pretty much the same.

GDP projections to 2050: how the rankings change.

Some of the UK’s decline, then, is part of the greater story of Europe and the West’s relative decline; what some have called the Great Rebalancing of the world economy, or the return to the historical norm.

Globalisation is a term that didn’t come into common use until the late 1980s but the process began when Magellan’s expedition circumnavigated the world and the Spanish Empire became the first on which the sun never set. Decisions made in Madrid had a direct impact from Cuba to the Philippines. Other European countries quickly got in on the act. Colonialism, followed by the industrial revolution, allowed Europe to become politically and economically dominant until, by 1900, its empires ruled the world. This period is now seen by many historians and economists as a blip. Globalisation, the process started by Europeans, will now see their economies decline in relative terms to where they were before 1700. China and India will, once again, be the richest and most populous parts of the world, as they were for a thousand years before the colonial period.

Against this background, anything that British policy-makers and business leaders can do is likely to be little more than damage limitation. The suggestion that if we put more effort into exploiting new markets it will help us keep our current position in the league table is fanciful. We have already fallen from 4th place since the middle of this decade. That process is unlikely to be reversed.

None of this is to suggest that we don’t need to seek new markets, invest more, build a better transport infrastructure and improve the standard of our education system. All these things help to maintain the UK’s competitiveness. But they won’t stop our relative economic decline.

We are living through a turning point in history, one of the consequences of which is the eclipse of Europe and the West by Asian, Latin American and possibly even some African economies. Pretending we can stop this from happening is delusional.

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8 Responses to Putting Britain’s decline into perspective

  1. Pingback: Putting Britain’s decline into perspective - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. willy says:

    It also requires swallowing a whole load of dubious assumptions uncritically . The PWC study suggests that China will manage an annual growth rate of 4.87% year in, year out, for 40 years (compared to a more realistic 2.47% for the USA). I’d bet against it, except I probably won’t be alive to collect.

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  4. Rick says:

    Willy – that’s the trouble with crystal-ball gazing. The secret is to convince people you know what you’re talking about then charge them for your reports now, rather than wait to be proved right before you collect.

    Joking aside, as you say, the figures in this report are up for challenge and a recent HSBC one has a rosier (from the UK and US point of view) conclusion. Even then, if you factor in the climate change predictions made by some, the whole picture changes yet again. I’m goint to try and deal with some of this stuff in subseqeunt posts.

    All that said, Britain’s relative economic decline (with emphasis on the word ‘relative’) is, I think, pretty much a done deal.

  5. Mean Mr Mustard says:

    You might like to seriously consider some of the topics in Chris Martenson’s Crash Course, which equally apply to the UK.

    http://www.chrismartenson.com/crashcourse

  6. Mean Mr Mustard says:

    Sorry, should have said ‘Hello’ first. Been a lurker here a while, I wandered over from Redundant Public Servant’s blog. Some really excellent insights here, they ring true from my experiences – I bailed out of the Civil Service last year. Just in time.

    Regarding the Crash Course, part 17 is the coup de grace, where the global oil flows reduce and can’t be compensated for even remotely with renewables. This undermines us when we need ‘growth’ just to repay debt. Expect globalisation to decline and digging for victory to return.

  7. Rick says:

    Welcome Mr Mustard and thanks for your kind words. I’ll have a look at your link later. Like you, I think the jury is out on globalisation over the longer term. Climate change could throw a spanner in the works too. I hope to post on this at some point over the next few weeks.

  8. In a mere twenty years’ time to 2031, the UK and the EU will be reaching the limits of despair when trying to capture any major future foothold in the global economic stakes. This will not be due to its people, but their governments with regard to their current and medium-term policies.

    These policies are inherently based in the old thinking that by joining universities and business together we can achieve economic dynamism in the future. It forgets that there are three crucial elements to achieve this – the ‘ideas’ phase, the R&D phase and the corporate commercialisation phase.

    I say forget, as the primer of this most important energiser for economic wealth creation, the ideas phase, is not taken seriously. It is the most important and fundamental missing factor. For without world-changing ideas first, the process cannot even begin.

    The British and EU systems do not comprehend what the history of S&T tells us: up to 75% of all the inventions that have made the modern world what it is today did not emanate from within the confines of our universities or advanced corporate research centres of excellence, but in the minds of ‘independent’ innovators, far removed from the final two innovation elements that constitute the ‘innovation chain’.

    Indeed, the ‘independent’ ideas element is more or less non-existent in UK and EU economic policy. This is unlike what is emerging in the East, where they are now starting to see that the ideas people are the most important commodity that a nation has.

    In twenty years’ time, therefore, with this lack of foresight and new thinking in Britain and the EU, we shall in reality just be hangers-on in the global economic stakes. Therefore for its own good, the United Kingdom and the EU have to start thinking ‘out of the box’ and give total prominence and resources to the initial ideas people. For if they do not we shall see in our own lifetime the inevitable collapse of living standards, the like of which we have never seen before and our offspring will live to be totally subservient to the economic might and power of the East.

    That is why it is so vitally important that we create now the innovative infrastructure throughout Europe for our ideas people to flourish and thereby equip our nations with the dynamic products and services that we shall dearly need.

    When will the UK and the EU realise this is the big question, for it has the most overriding repercussions and consequential economic effects that have ever been seen before for the 500 million+ people of the European Union?

    We really have to start thinking ‘out-of-the-box’ like our Eastern counterparts before it is far too late to stem the economic decline that is now upon us all.

    Dr David Hill
    Executive Director
    World Innovation Foundation Charity

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