Frigid Britannia

Good piece about how Brexit compounded what was already a running economic disaster in the UK:

In 2007, before the global financial crisis, Britain was at its postimperial zenith. Median household income had just surpassed that of Germany. A pound was worth more than $2, and London was arguably displacing New York as the center of international banking.

But since then, Britain has been left behind. The country’s output per person is now only just above that of Mississippi, America’s poorest state—and that slight lead is only achieved thanks to London. Outside the capital, in places where tourists do not visit, living standards fall well below Mississippi’s. Brits visiting the United States find that their currency has depreciated to the point where the pound today buys only about $1.35. British wages have lagged well behind those in the U.S., and also those in Germany, France, the Netherlands, Denmark; once you account for inflation, they’ve barely grown at all. Within the next decade, the typical Pole will have a standard of living equal to the typical Brit, if current trends continue.

One generation ago, Britain was a major global power; today, it is a middling one, gripped by sclerosis. Taxation is at the highest level since World War II, yet public services have deteriorated. The National Health Service, the celebrated pillar of the British cradle-to-grave welfare state, has a backlog of 6 million patients—almost a tenth of the population—waiting for treatment. The health service now has to spend more money settling maternity-malpractice claims than it does on actually providing maternity care. Many Brits can neither obtain an appointment with a publicly funded dentist nor afford a private one; in a 2023 survey, one in 10 reported doing DIY dental work, in extreme cases extracting their own teeth or gluing broken crowns back together.

Incomes can be shockingly low: Junior doctors recently went on strike for the 15th time in three years over their salaries, which start at just £38,800; the median salary for British civil servants is £35,680. In April, amid the Iran conflict, the Daily Mail pounced on Prime Minister Keir Starmer for vacationing in Valencia, Spain, at what the tabloid described as a luxury hotel, costing £200 a night.

Some in Britain blame rotten luck—the 2008 financial crash, the coronavirus pandemic, an energy crisis after Russia invaded Ukraine. But other countries endured these challenges too. What differentiated Britain was its self-sabotaging responses to these and other problems. Brexit is the most famous example, but hardly the only one. Bad choices, beginning just after the financial crisis, begot worse ones. As public disillusionment has grown, politicians have been rotated swiftly in and out of power, abruptly terminating whatever policies they had started. Six different prime ministers have governed since the 2010 general election. They do not seem to be getting more talented over time. Less than two years after Starmer’s Labour Party took power, his net approval rating has plunged to minus 42 points. He is widely expected to resign this year, and may have done so by the time you read this.

And, of course, Brexit itself was the result of incredibly incompetent and short-sighted governance. And Tory austerity is another major part of the problem:

But the government’s actions during and after the crisis compounded the damage. Rather than increase spending to revive depressed demand, as modern Keynesians would counsel, the government, then led by Conservative Prime Minister David Cameron, opted to slash budgets as revenue plunged. The theory was that fiscal discipline—cutting spending more sharply than Britain’s peer countries—would inspire confidence and spur growth. At the time, deficits and debt were seen as immoral; unlike profligate Greece, Britain would manage its affairs prudently.

The promised growth did not materialize, and austerity left scars that linger still. Funding for day-to-day NHS operations was maintained, for instance, but only by cannibalizing the capital budget. A 2024 government report found that, as a result of austerity, Britain has “crumbling buildings, mental health patients being accommodated in Victoria-era cells infested with vermin with 17 men sharing two showers, and parts of the NHS operating in decrepit portacabins.”

After austerity cuts to welfare benefits took effect, the share of children who grew up in long-term poverty, meaning half their childhood or more, shot up from about 14 percent to 23 percent. Nutrition appeared to suffer, and doctors reported increased cases of diseases stemming from vitamin deficiencies, such as rickets and scurvy.

We should also shout out Tony Blair, who despite his quite effective domestic policy ruined the Labour brand by becoming a poodle for Bush and Cheney’s dumbest misadventures, at a time when most of his European peers immediately understood what the shot was. And the effects of Brexit were also eminently predictable:

Settling the formal Brexit deal took almost four years of negotiations between Britain and the EU. The resulting uncertainty took a toll on British businesses even then. In 2018, one year before his ascension to prime minister, Boris Johnson was asked by a European diplomat about these adverse effects. He replied, “Fuck business.” And indeed, something like that happened. A recent paper on “The Economic Impact of Brexit,” by five economists, calculated that Brexit caused business investment to drop by 12 to 18 percent, productivity and employment to decline by about 3 to 4 percent, and, most striking, GDP per capita to fall by 6 to 8 percent—twice as much as earlier estimates. The harms weren’t all immediately visible. As with austerity, they accumulated over time.

But SOVEREIGNTY something something. Also not great is that the UK also has housing policy that is even worse than California’s:

Britain suffers from a housing crisis significantly worse than America’s. The problem cannot even be blamed on zoning, because Britain does not have a zoning regime to speak of. Rather, every attempt to build is a painful, ad hoc negotiation with local government councils and NIMBY residents. As a result, housing costs per square foot are among the highest in Europe. In the words of one report, “Our housing stock offers the worst value for money of any advanced economy.” France has roughly the same population as the U.K., but almost 50 percent more homes. And yet, since the financial crisis, the U.K.’s rate of housing production has only fallen.

Don’t cry, don’t raise your eye, as a British poet once said.