Empower Your Business with Sales Process Analysis in United Kingdom

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not a lot of countries are experiencing a downfall as dramatic as the United Kingdom the country that once ruled over the largest Empire in history is now Fading Into irrelevance in 2007 the country had a slightly higher GDP per capita than the United States now it only has 60% of America's figure with a GDP per capita of $46,000 compared to $76,000 in the US the UK is actually poorer than Mississippi the poorest state in the US with a GDP per capita of around $48,000 and if current trends continue Poland could overtake the UK in GDP per capita within a decade this doesn't come out of nowhere adjusted for inflation there is been virtually no economic growth in the UK since 2007 in part this is due to to a sudden halt in productivity growth if the productivity trend from before 2007 had continued the UK's economy would have been 25% bigger than it is now but there's a lack of innovation and investment and the country is falling behind its peers this has also had an effect on real wages meaning wages adjusted for inflation Brits are earning a similar amount now as back in 2008 meaning purchasing power has stalled before this period real wages used to grow 33% a decade publicly traded companies in the UK also had a terrible past two decades we can see this in the footsie stock index tracking the country's 100 biggest stocks at the time of writing this video it has only grown about 25% since the beginning of the century for comparison the American S&P 500 Index has grown over 250% during the same time period or around you know 10 times as much but all these things leave us questioning why the country is struggling so much or as Britain's would say in a bit of a pickle is it government policy International competition or other fundamentals that are causing this decline in this video we'll take a close look at the UK's economy and we'll go over the possible consequences that this downfall might have and you can see the UK the higher these bars are the more equal the UK is much more unequal than many other countries around Europe with no plans to improve its resilience Britain is heading for systems collapse everyone's on strike the NHS is broken and we're skint Where Do We Go From Here the impact of lockdowns during the pandemic ing to the Center for social justice which produced the report is that life is going backwards for many with staggeringly high numbers experiencing mental health conditions as mentioned earlier things started going down downhill for the UK from 2008 so to truly understand the roots of the problem we have to look back to the great financial crisis 2008 saw the worst recession in the UK since World War II only surpassed by the co shock in 2020 because the country has a large financial sector the impact of the crisis was huge following the collapse of the Layman brothers and the issues with subprime mortgages in the US the Global Financial Market was in shambles many banks globally including the ones in the UK faced liquidity issues they couldn't get their customers cash back because they were holding bad loans the British Northern Rock Bank experienced these problems which led to the First Bank Run in the UK in 50 years there were also Financial issues with the hbos bank the Royal Bank of Scotland and the Bradford and Bingley Bank the government in London as well as the country's Central Bank the bank of England stepped in to provide Emergency Loans this was to restore confidence and to prevent the crisis from spreading even further still these problems in the financial sector had long- lasting effects because the government spent a lot of money on bailing out Banks and fighting the crisis government debt soared the problems with government finances led to a decade of austerity which we'll discuss later the 2008 crisis also had an impact on the rest of the economy because of reduced lending and public Trust spending declined and the country's GDP fell by 6% but this recession was very different from others which we can see on this chart comparing the post recession recoveries most of the time growth is back on track 3 or 4 years after the crisis starts but in 2008 the crisis had caused a stagnation of about a decade what makes us even worse is that 12 years later the country got hit by another economic disaster or we should say two the co pandemic caused a record GDP decline of 11% in 2020 the worst economic performance since 1709 it was a steeper decline than any other major economy like many other governments London turned to inflationary financing to prevent things from going from bad to worse basically it was keeping the economy alive with government debt this debt went from 86% of GDP to 5% of GDP in a year up about 20 percentage points the country's Central Bank the bank of England also helped with this through quantitative easing it pumped nearly half a trillion pounds in the economy in 2020 and 2021 this worked out in the first year as most of the initial damage was already undone by 2021 but giving a lot of stimulus to the economy comes with a price as it can create inflation later on this process also called the transmission process can take one or two years to complete as the UK was gearing up for a postco inflation wave it was hit by another crisis when Russia invaded Ukraine in 2022 Energy prices soared due to sanctions at its peak electricity in the UK became nearly 10 times as expensive the government in London tried to help consumers with support packages but that didn't really do much to prevent inflation combined with the effects of Co there was a massive cost of living crisis in October of 2022 inflation reached a peak of 11.1% a 40-year high the bank of England had to increase interest rates to slow down the economy and ease inflation think of high interest rates like hit in the brakes where people lend less money and buy less goods for example it becomes more expensive to finance a car with a loan but because purchasing power had just been slashed after the cost of living crisis the spending decline got even worse the same car that had just gotten harder to finance was also way more expensive due to inflation and this didn't just happen with cars but throughout the entire economy in the final half of 2023 the UK was once again in a recession surprisingly it was the only G7 Nation to be in Decline although the other major economies experienced stagnation GDP is once again recovering in 2024 but the crisis IES of 2020 and 2022 hurt the country permanently economists predict that it caused a long-term loss of 3% of GDP still this whole story doesn't seem to differ much from the rest of the world most countries experienced the same problems in 2008 2020 and 2022 but the UK suffered way more from these crises than others did which leads to an interesting question why is Britain so much worse off than its peers well to understand this we have to look at the country's economic fundamentals as we've already discussed productivity has stalled ever since 2007 this means that the country isn't making its people and resources more effective over time stagnating productivity goes hand inand with low investment investment into things like infrastructure and research and development is usually what drives productivity growth unsurprisingly the UK consistently ranks as the lowest of the G7 and among the lowest of the 37 developed economies in terms of investment one of the key metrics in this regard is gross fixed Capital formation which measures how much money is invested rather than consumed on this chart we can see that ever since the late 1990s the UK has been lagging behind its peers France and the United States the private sector is one of the issues here as the UK has the lowest private sector investment in the G7 this has only been a problem for the last last two decades back in 1996 it was actually second in private investment among G7 countries if we dig even deeper we can find the root cause for this decline before 2008 there was a few highly productive companies that were causing most of the productivity growth the top 5% had growth in the double digits these businesses included the UK's successful Finance sector the UK is the largest net exporter of financial services globally with a 99 2 billion pound Surplus in the financial sector in 2022 London is competing with New York as the world's Financial Capital the point is though that the rest of the economy didn't enjoy similar growth the bottom 40% of companies were already stagnating or even declining in productivity before 2008 in economics this is called a two-speed economy where some parts are growing but other parts are stagnating or even declining the two-speed problem is way worse in the UK than in other countries such as France or Germany as you can see on this chart Britain has more low productivity companies on the left and more High productivity companies on the right we can also see these divisions at a regional level some well-off parts of London have double or triple the income of Southern Scotland or west Wales within London there's also a nearly triple income difference between the poorest and the wealthiest districts this is a symptom of wider problems it means that some some parts of the country are just way more productive than other parts the reason is that investment is concentrated in just a few areas London is attracting most of the foreign direct investment with around 40 to 50% of the money going there no wonder that London has outgrown all other regions by a long stretch but following the crisis in 2008 the cracks begin to show the businesses in the financial sector slowed down this revealed the fact that most of the economy already had serious productivity and investment issues beforehand so a big issue is that the UK's workers are not productive enough at least outside of London but another fundamental problem is that the country doesn't have enough workers to begin with the UK's Workforce is collapsing which undoubtedly plays a role in the economic decline Britain's birth rates have been below the replacement level since 1973 largely following Trends in other developed Nations like the us or France it sits at 1.56 births per woman right now which would translate into every generation being more than 20% smaller still the population has continued to grow and is expected to grow until 2050 in part this is because of the Aging population because people simply get older the growth in the elderly population makes up for the lower births but that's not solving the economic problems since the elderly population doesn't have much economic output in about 25 years a quarter of UK citizens will be over 65 which will have a major impact on public finances while spending on health care and Social Security only increases income and tax revenues only goes down as more people retire however the Aging problems in the UK aren't that bad relatively speaking the country's population pyramid is actually pretty healthy at least compared to Nations like Italy various European countries have new generations 60% smaller than the boomer generation which is something the UK doesn't have to worry about this is because birth rates are slightly better but also due to high levels of immigration for 30 years now Britain has been consistently taking in more people than went out of the country net immigration has increased enormously going from 100,000 yearly to nearly 3/4 of a million in 2022 but there's one problem with immigration it's hard to get high-skilled Workers into the country in fact it's hard to keep high-skilled workers in the UK while 1.2 million people migrated to the country in 2023 more than 500,000 moved out of the UK during the same year this is causing a weird brain drain situation it's attracting people from lower developed countries while it's losing people to higher developed economies because other nations offer better salaries the more productive workers in the UK naturally move out now one area of the economy seems to be exempt from these problems the finance industry the banks and insurers in London still offer good salaries and their workers are very productive as they're the only one winning in the UK's two-p speed economy but what if the finance industry is actually part of the problem you see the country's capital markets are broken this is pretty obvious the country with an enormous financial sector is ironically the one struggling with underinvestment it's clear that the financial activities in London aren't really connected with the rest of the country and total the UK's financial institutions have $33 trillion in assets which basically includes all the Investments and Loans on their balance sheets there is no way that the UK economy of $3 trillion can absorb all of that money with financial assets 11 times GDP there's simply not enough demand for loans and there are not enough businesses to invest in but that's the point London's financial sector is mostly doing business internationally for comparison the US financial sector has assets five times the GDP which is more in line with domestic demands for loans and investment while this outsized financial sector had its benefits for London it leads to a broken system for the rest of the country the 2008 crisis hit the UK way harder than other countries due to the overdependence on finance and there are also other structural problems the pound is arguably overvalued because of the huge demand in the financial system this makes other Industries uncompetitive internationally with an overvalued currency exports are more expensive and imports are cheaper You could argue that the rise of the financial sector came at the expense of the UK's manufacturing industry in 1900 Britain had the biggest industrial output in the world as it was the first country to industrialize but more than a 100 years later there's nothing left of this in the area of total manufacturing output it's only 11th in the world over the last 30 years in particular the industrial decline has gotten very bad the value added from manufacturing was haved from 16% of GDP to 8% of GDP all of the simple manufacturing has gone to countries like China while high-end manufacturing has been more successful in Germany and the US the effect of this has been clear the UK now has an economy heavily reliant on services with 81% of GDP falling in this category in the nation's trade position we can also see this trend it has a growing Trade Surplus in services and a growing trade deficit in Goods overall Britain's total trade balance is at a deficit which shows the true cost of an overvalued currency now we could go on for hours talking about all the other economic factors playing into this but you get the point there's something fundamentally wrong with the UK's economic model model understandably this is having an impact on the country's politics voters are fed up and there has been a huge loss of confidence in the UK's governance although everyone recognizes the problems by now the different parties disagree on the correct policies to fight them a watershed moment Was the brexit vote in 2016 it decided whether the country should leave the European Union and it was a very close call 51 9% of Voters wanted to leave while 48.1% wanted to stay brexit was undoubtedly a trade-off the benefits included freedom from the EU in economic policymaking and more protection for domestic Industries but critics of brexit pointed out that the UK relies heavily on free trade with the EU like many economists predicted brexit had a negative effect both in the short and long term after Co the UK had a worse recession and recovery than countries who remained in the EU in part this was caused by the downstream effects of brexit companies who used to do business with the EU now have higher costs in their supply chains because of trade barriers for London's beloved financial industry there were also some bad consequences over 440 Financial firms have moved jobs out of the UK and banks have transferred nearly $1.4 trillion to European accounts Ireland France Luxembourg and Germany have welcomed this with open arms still staying in the EU would have had some bad effects economically the UK had a growing trade deficit with the rest of the Union which was the biggest contributor to the overall trade deficit in 1999 the UK had a deficit with the EU of around 10 billion pounds in 2019 just 20 years later this had already increased to nearly 100 billion pounds the reasons for this were fundamental the UK was losing the competition with the highly productive economies in Western Europe and the low wage economies in Eastern Europe so many believed it was better not to compete with these countries in a free trade zone but after brexit got implemented in 2020 things only went downhill in British politics former prime minister Boris Johnson resigned because of the party Gate scandal it became known to the public that he broke his own Co rules during the lockdowns near the end of his term about 2third of the UK's population disapproved of him this also has an economic impact as political instability isn't good for PR and it didn't get a whole lot better afterwards Boris Johnson was followed by Liz truss after she stepped down she was replaced by the current prime minister Rishi sunak he doesn't enjoy good public support with 70% of Brits having an unfavorable view of him in part this is because he carries the 14 yearlong conservative Legacy with him defined by economic stagnation recently he called a new election to take place on the 4th of July this is a huge bet since his rival labor candidate is ahead 30 percentage points at the time of writing this video some estimate Rishi sunak chances of winning are just 1% still it remains to be seen if a potential labor government will do much better for the economy it can start off with a blank slate but it will still face a bunch of impossible problems one of these issues has to do with public finances public investment by the national and local governments is below average compared to the UK's peers this fits into the economically conservative policies of the Tory governments defined by tons of austerity measures there's one reason for this namely High public debt authorities have a debt reaching nearly 100% of GDP in just 30 years the debt relative to GDP increased nearly fivefold as it was just 20% in 1990 during the fiscal year of 2022 to 2023 interest payments on public debts increased to a record 111 billion with a working population of 33 million that's already more than £3,000 per worker interest payments have even exceeded the UK's spending on its education system when a country spends more on debts than on education that should tell you enough about where it's headed this will only get worse if the current High interest rates continue because debt will be become more expensive to maintain these financial problems will force the government in London to make some tough decisions it can either decrease spending or increase tax rates but there isn't much room to do both of these things the country's tax burden is set to hit an 80-year High by the end of the decade jumping to an average of 37% for the highest earning Brits income tax is already at 45% increasing this even further will meet a lot of resistance however the austerity measures of the conservative government are also nearing their limit eight out of 10 UK citizens think that public services have gotten worse over the last 5 years the low budgets are having a real effect on the quality of Education healthc care and the justice system recently the government published a list of 147 State schools whose buildings are at a risk of collapse the country's National Health Service has a backlog of about 7.7 million people waiting for treatment that's one in seven people in the entire country not being able to receive the care they need the justice system is in a similarly dire situation magistrates courts have more than 300,000 criminal cases outstanding the crown courts who are dealing with more serious offenses are 65,000 cases behind in short Britain's public services are crumbling which is the result of a decade of cost cutting the potential new labor government will try to put an end to this by increasing spending but that's also not a viable long-term solution it will have to increase taxes even further or put on even more debt which can lead to more problems down the road another hardto solve issue for British politicians is the country's trade position in 2023 the country imported 33 billion pound more in goods and services than it exported Britain has had a trade deficit every year since 1998 except for 2020 we've already covered how this was a big reason for leaving the EU but in order to keep Britain's trade flowing the nation has tried to shift its economic alliances with other countries it might be able to get more favorable trade deals the one country where it set most of its hopes on was the United States brexit supporters said that leaving the EU would allow for more trade with the US negotiations for a US UK trade deal started in 2020 but have stalled ever since last year the two countries signed the Atlantic declaration which improves bilateral trade but is far from a Free Trade Agreement the issue is that the US doesn't have the same interests as the UK when it comes to the partnership both sides of the aisle in Washington want to protect domestic Industries meaning they don't want to open up the American Market to foreign goods and services on a state level however there are more opportunities the UK has signed trade packs with eight us States including the second and third most populous states Texas and Florida in total the UK has already accessed a quarter of the US GDP talks with other states like California and Illinois are ongoing there are also new trade deals with other countries since brexit the UK has signed packs with Canada Mexico Israel Switzerland South Korea and turkey these agreements largely replicate the eu's agreements with these countries but the UK also tries to use its independence from the EU to improve economic ties with new countries in 2021 it signed a free trade agreement with Australia and in 2022 it did the same with New Zealand there have been years of negotiations with India although there are no results as of yet the two countries have similar sized economies and they could both benefit from Mutual trade still a possible free trade deal between the UK and India have been suspended until both have had elections to sum it all up Britain is facing a lot of headwinds if the current economic situation continues the effects will be dramatic the nation that used to have an Empire where the sun doesn't set could lose all of significance on the world stage a Chinese Ambassador made it very clear during an interview when asked if China and the UK were competitors he simply explained that Britain is not a competitor nor an adversary quote unquote the British government should not overestimate its impact on the global scene and view Britain as a rival of China oh that's a rude awakening