Plain text as article is paywalled:-
Britain is a poor country pretending to be rich
Strikes, early retirement, and a me-me-me culture at work all point to a nation living in a fantasy world.
MATTHEW LYNN
21 December 2022
The 50-somethings have all taken early retirement, looking forward to a few decades of cruises and yoga undisturbed by anything so unpleasant as work. The 20-somethings are fuelling a boom in designer goods sales while still living with their parents. Much of the public sector is out on strike, demanding double-digit pay rises, while the private sector is loafing around in its PJs – officially known as working from home – expecting perks for occasionally showing up at the office. The British seem to have decided that this is so fantastically wealthy a country that they can afford every form of luxury they want while working less and less.
The problem is that it is 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 soon expected to fall behind Mississippi, traditionally the worst off state in the US. According to some projections, in less than 15 years we are even set to be overtaken by Poland, the country that used to supply us with an endless army of cheap workers.
Nobody seems to have noticed, however. Indeed, evidence for the UK’s delusions of wealth is everywhere. A House of Lords report this week concluded that soaring levels of economic inactivity were driven in part by 50-somethings complacently assuming that a pension pot of a few hundred thousand would keep them in style for the rest of their lives – likely to be a massive underestimate given how long they are likely to live. Younger people appear to be giving up on a life of work entirely, although not the benefits: an analysis by Morgan Stanley found that luxury goods sales were surging in that group, in part because fewer of them have left their parents’ home.
Among those people who do work, a growing “me-me-me” employment culture prioritises employee “well-being” over such mundane matters as productivity or, even worse, profits: witness the constant demands for “flexible working” (which, funnily enough, always means “less working”), 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 the train drivers or postal workers, there is no possible justification on either moral or economic grounds for their claims.
There are different explanations for each of those trends. But at root they are all surely part of the same problem. They are based on the assumption that Britain is an incredibly rich country, in which people should not be troubled by anything resembling hardship, and in which the “rich” can always pick up the tab. It is not hard to work out how that idea established itself. Lockdown saw millions of people paid to do nothing, while the financial crisis led to enormous bailouts for banks that had made poor commercial decisions. But in truth it has been developing for years. For at least two decades the country has been living wildly beyond its means.
We have been running one of the biggest trade deficits in the world, meaning that we consume more than we produce year after year. Our government has been spending vastly more than it collects in taxes, creating a debt-to-GDP ratio that is close to 100 per cent, with even more debt hidden off-balance sheet, a trick perfected by Gordon Brown as chancellor to disguise the epic scale of deficit spending.
And, to cap it all, private debt has soared as well, hitting another 83 per cent of GDP compared with less than 60 per cent at the start of the decade. To put it in simple terms, if you took out 17 credit cards on the same day you could afford to check into the Savoy and live like a Saudi prince for a week or two. You might look rich – but it is just an illusion. An illusion entrenched by years of ultra-low interest rates.
The unfortunate Liz Truss attempted to challenge all this and reset the political debate with a focus on economic growth. She was turned on furiously and turfed out of office. But the conjuring trick can’t last much longer. Sooner or later the bills for extravagance always fall due. It is just a matter of time – and the UK is in for a nasty shock when everyone realises that we can’t afford nearly as much as we thought we could.
© Telegraph Media Group Limited 2022