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The 50-somethings have all taken early retirement, looking forward to several decades of travel and yoga, undisturbed by anything unpleasant like work. 20-somethings are driving a boom in sales of designer goods despite living with their parents. Much of the public sector is on strike, demanding double-digit pay rises, while the private sector struts around in its PJs – officially known as working from home – expecting benefits for showing up occasionally to the office. The British seem to have decided that the country is so incredibly rich that they can afford every luxury they want while working less and less.
The problem is that’s not even remotely true. In fact, the opposite is the case: Britain is turning into a relatively poor country, and fast. In terms of GDP per capita, the UK is expected to soon fall behind Mississippi, traditionally the worst state in the US. According to some estimates, in less than 15 years we will overtake even Poland, the country that used to supply us with an endless army of cheap workers.
However, someone seems to have noticed. Indeed, the evidence for the UK’s wealth illusion is everywhere. A House of Lords report this week concluded that rising levels of economic inactivity were partly driven by 50-somethings – assuming that a pension pot of a few hundred thousand would keep them in style for the rest of their lives – could be massive. An underestimation given how long they can live. Young people appear to be leaving work life entirely, though the benefits are not: Morgan Stanley’s analysis found that sales of luxury goods are rising among that group, as fewer of them have left their parents’ homes.
Among those who work, an increasingly “me-me-me” employment culture prioritizes employee “well-being” over material things like productivity or, worse, profit: “flexible work” (which, ironically, always means occurs “less work”), four-day weeks and quarter-life gap years. And there is widespread public support for workers going on strike, even when, as is clearly the case for train drivers or postal workers, there is no possible support on moral or economic grounds for their claims.
There are different explanations for each of those trends. But at the core they are all part of precisely the same problem. They are based on the assumption that Britain is an incredibly rich country, in which people shouldn’t be bothered by anything like hardship, and in which the “rich” can always pick up the tab. It is not difficult to determine how that idea establishes itself. Millions paid for doing nothing in the lockdown, while the financial crisis led to massive bailouts for banks that made poor business decisions. But in fact it has been developing over the years. The country has been living wildly beyond its means for at least two decades.
We are running one of the largest trade deficits in the world, which means we consume more than we produce year after year. Our government is spending far more than it collects in taxes, creating a debt-to-GDP ratio that approaches 100 percent, hiding even more debt from the balance sheet, a tactic perfected by Gordon Brown as chancellor to hide. is The epic scale of deficit spending.
And, to cap it all, private debt has also risen, touching another 83 percent of GDP compared to less than 60 percent at the beginning of the decade. Simply put, if you took out 17 credit cards on the same day you could check into the Savoy and live like a Saudi prince for a week or two. You may look rich – but that’s just an illusion. Delusions surround years of ultra-low interest rates.
The unfortunate Liz Truss tried to challenge all this and reset the political debate by focusing on economic development. She was furious and stormed out of the office. But the magic trick doesn’t last much longer. Sooner or later extravagant spending bills are always due. It’s only a matter of time – and the UK is in for a nasty shock when everyone realizes we can’t afford as much as we thought.
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