Understanding the Economic Discontent in Britain
There is a palpable sense that something is fundamentally amiss in our nation. We are subjected to record levels of taxation, our borrowing continues to exceed even the projected deficits, and yet the services we rely on—transportation, policing, healthcare—seem to be faltering. This does not add up.
A significant part of this predicament stems from poor value for money; productivity has not rebounded to pre-pandemic levels, meaning we receive less in return for our financial contributions. However, a more profound issue lurks beneath the surface. The difficulties we face in making ends meet—whether as individual households or as the Chancellor of the Exchequer—are perplexing for a country that we perceive to be wealthy. Shouldn’t we be capable of settling our bills, balancing our budgets, and still have a little left over for savings?
The harsh reality is that, in comparison to other nations, Britain is not as affluent as we like to believe. This is not merely about a decline in our past wealth, but rather an illusion of current prosperity.
This misconception creates a toxic environment. A lack of genuine wealth is a critical issue; it exposes us to various crises, undermines our ability to tackle new challenges—be it defense threats or climate change—and limits our choices at every turn. Consider the tough decisions faced by the Government, such as whether to prioritize winter fuel allowances over public services or to choose between defense and international aid.
While this situation is troubling, the real danger lies in an electorate that remains unaware of the underlying problem. This ignorance complicates the implementation of necessary, sometimes radical, measures to address these challenges and fuels a sense of alienation and frustration toward issues that appear to lack solutions.
In our minds, we believe we should be able to sustain our lifestyle, which explains the public outrage when things fail to function as expected and the instinctive belief that we can manage tax and debt levels without making cuts to welfare or the NHS. Yet, the stark truth is that we simply cannot.
- According to the International Monetary Fund (IMF), the United States is now 39 percent wealthier than the United Kingdom on a per capita basis.
- If the UK were to join the US, we would find ourselves as the poorest state in the union—indeed, even poorer than Mississippi.
- America’s economic advantage continues to expand.
Moreover, this isn’t solely about lagging behind traditional competitors. Back in 2010, the average British citizen possessed 177 percent of the wealth of the typical Pole. By last year, that number had dropped to 121 percent. Poland’s economy is surging, and the IMF predicts that next year, Poland’s GDP per capita will surpass that of Japan. I have previously discussed the trend of ambitious young Britons relocating to Dubai; it seems increasingly plausible that within the next decade, we might witness them moving to Poland and the Baltic states in search of a better life.
I could continue to elaborate—there is a wealth of data illustrating the stagnation of our economy. This issue is subtly echoed in the confusion surrounding public and private financial discrepancies; it becomes glaringly evident once we recognize that our lack of wealth may indeed be the root cause.
This situation raises two crucial political questions. First, why have we failed to engage in an open dialogue about this reality for so long? A significant factor is our reliance on gross domestic product (GDP)—the total wealth of the nation—as the primary indicator for political and economic reporting, rather than GDP per capita.
When you think about it, GDP per capita serves as a far more insightful measure than GDP alone. After all, wealth is about how much each individual possesses, not merely the total amount available regardless of the population it needs to support.
This distinction is akin to the difference between winning the lottery on your own versus as part of a syndicate. Economic growth over the centuries has indeed produced wealthier societies because it has progressed at a rate faster than population growth.
Politically, there are evident reasons why the less informative measure of GDP has been favored for so long. For one, GDP alone paints a more flattering picture for governments, and politicians naturally lean towards numbers that enhance their image. Additionally, using GDP per capita necessitates confronting challenging questions about immigration levels. For many years, the assumption was that increased immigration would automatically lead to economic growth; however, this perspective neglects to account for the effects on GDP per capita when the population increases.
The presentation of net migration as a singular figure, without nuance, likely exacerbates this misunderstanding—after all, the departure of a young entrepreneur is not economically equivalent to the arrival of a low-income manual worker.
The second political question is this: what will it take to awaken us to the seriousness of this issue and prompt us to consider the radical measures necessary to rectify it? I have my own preferred solutions, and no doubt others will propose different approaches, but all require a collective awareness of the severity of our situation to foster a willingness to take action.
Political honesty regarding the facts would be beneficial, though it would indeed take a courageous Chancellor to stand before the public at the next Budget announcement and disclose that the Office for Budget Responsibility forecasts zero percent growth in GDP per capita.
Rational and open discussions about these stark realities should be sufficient in an educated society; however, this necessitates a willingness among communicators to be bold and a tolerance among the electorate for uncomfortable truths. We can only hope that these factors will be enough, for the alternative is that we may have to wait for a crisis—like the Winter of Discontent in 1978/79 or the economic disasters in Argentina that led to the rise of figures like Javier Milei—while these unaddressed issues continue to deteriorate.
In the interest of avoiding a scenario where we must tear off the metaphorical plaster later, it is crucial to address these issues now, as the pain of inaction will undoubtedly be far greater down the line.
Mark Wallace is the Chief Executive of Total Politics Group
