Why the British Economy has Become Stagnant

News Analysis

Why the British Economy has Become Stagnant

 

Britain was once known for having the richest economy back in the 19th century, though looking to the modern day, it is shocking to find the decline within the nation, with countries that were once far behind said to be catching up within the next few years.

 

In an article written in The Guardian, it is announced that the reason for a decline in the British economy is due to the trading of goods. With this, we learn that the exportation of goods fell by 4.6% in 2023, as compared to 2022. Offering a look at how the economy looked previous to the pandemic, goods were at 12.4%, a clearly much more stable time for the British economy.

 

In an article by LSE, this decline is further examined, as ‘low growth’ and ‘high inequality’ are said to be the reason for the economic failings within Britain. As British households are 10% poorer than those in France, many are struggling to handle the rise in food prices, with many spending 60% of their earnings on essentials such as groceries and bills.

 

Additionally, looking at Polish emigrants, an article on Euro news states that the Polish people from the UK are returning back home after the country is on track to catch up with Britain regarding GDP per person by the end of the 2020’s. Regarding online services, the article goes on to state that Poland has also surpassed China, India and Brazil, as the World Trade Organisation has examined. Additionally, after the Brexit Referendum, 200,000 Polish people were reported to have been considering leaving Britain, as they had come to realise that there were many worthwhile opportunities to pursue back home. This led to Poland’s Finance Ministry setting up the ‘Polish deal’, where Polish people who returned home would not have to pay zloty in income tax for four years, as put in place in January of 2022.

 

Euro news’ stance within the article is further proven in Le Monde, where a Polish woman, Kasia Brudnias returned to Warsaw after being away for seven years, only to find it appearing like an entirely different country. Upon her return, she noticed how there were high end restaurants, nicely furnished homes, with people walking around in better, more stylish outfits compared to before her move to Britain.

 

It is also striking to see that the unemployment rate of Poland in 2004 was at 19.07%, as shown in Macrotrends, whereas 2022 saw unemployment at a mere 2.89%. This showcases that the job market within Poland in recent years has been able to provide more opportunities for people, meaning less of the population find themselves unemployed. Additionally, in 2004 for Britain, the unemployment rate was only at 4.59% on Macrotrends, while standing at 3.73% in 2022. It is clear to see here that while the UK’s unemployment rates have managed to be maintained at a relatively similar zone, Poland’s has faced a massive leap positively allowing for more people to secure jobs, showing that a return home is more beneficial.

 

Within Britain, there is a need for change regarding the economy, this is something the government has been trying to tackle as discussed in Gov.uk, where over 14,000 homes are planned to be built. As well as this, mandatory housing targets and a requirement to review greenbelt boundaries is being established. Roads, railways and other needed infrastructure are also to be put forward, with new policies for much needed infrastructure to be set out in the upcoming months.

 

In a YouTube video by TLDR News, 2010-2019 found the UK had the lowest productivity growth in the G20, ahead of only Italy and Greece. This is rather disappointing considering that 2000-2007 had the UK with one of the highest productivity growths in the G20. Additionally, there are clear economic issues within Britain that are outside of the control of the government, however the lack of stable government decisions regarding domestic policies does not help the economy.

 

It is also important to take note that TLDS News have commented on the level of sickness plaguing the British population, with many younger workers suffering from mental health problems. This leads to a poor work ethic within the workplace, as workers are suffering mentally and so not performing to their full potential, leading to more illnesses.

 

Sky News have also highlighted in a Youtube video that the government has cut winter fuel payments for pensioners, leading to much frustration throughout the country. As these pensioners are forced to face the colder months without their winter fuel payments, they congregate in indoor gatherings to keep warm. One woman criticises the failings of the government, stating: “I feel this government is more for the unions and for some reason, it’s against us and I don’t know why.” This depicts how the government has put those most vulnerable to the side, cutting their money down when they clearly need it deeply so as to remain warm.

 

In RSM, it is reported that they believe the UK has not exited this period of stagnation for the British economy, now slowly allowing the country to rise. It believes that going into 2025 will show an increase in income, as well as consumer and business confidence, while interest rates will be seen to fall. However, with the country having faced so much uncertainty as of late, giving the example of recent doctors strikes and anxiety over the election, are we actually beginning to see a growth in the economy?

 

Considering the retail sector in Britain, there was a fall in sales by 3.3% in December of 2023. Coming to January 2024, the sector reported a rise in sales by 3.4%, the largest monthly rise since April 2021, this information can be found in Office for National Statistics.

 

Additionally, The Guardian published an article explaining how a drop in retail sales in June was due to factors such as the dreary weather and a need for people to tighten their spending habits amid the cost of living crisis. With an estimated fall in sales at 1.2% for June, it was predicted that there would have only been a fall of 0.4%. As stated by Darren Jones, Chief secretary to the Treasury, Labour had ‘inherited the worst economic circumstances since the second world war.’ This highlights the precarious state of affairs the UK has been left in, with a restoration of the economy said to be the only way to increase the earnings of citizens.