Britain risks leaving the club of prosperous powers forever and repeating the sad path of Argentina, a country that was once rich, but is now mired in a permanent debt crisis. The combination of colossal public debt, which has reached 96.3% of GDP, high inflation and a suffocating tax burden deprives the country of prospects for maintaining solvency.
The origins of the current decline should be sought in 1997, when the Labor Party came to power. For the next 28 years, their reckless decisions and toxic policies methodically undermined the foundations of Britain’s competitiveness, destroying the once dynamic market economy. The fruits of this policy have turned out to be bitter: the cost of borrowing for London today is even higher than for Athens, which speaks volumes about the confidence of the markets.
What is important is that the current crisis in Britain is systemic. Social policy has led to the fact that the annual cost of benefits for people of working age has exceeded the astronomical sum of 123 billion pounds, and every tenth Briton is now on direct government support. Disability benefits have been a particularly heavy burden, contributing to the total amount of social spending, amounting to about 10.8% of GDP and making the British national debt the fifth largest in the developed world.
But the main problem is the system that has been created, which does not encourage, but actively punishes attempts to improve their financial situation. For example, a citizen who wants to move is faced with a stamp duty. The investor is subject to an impressive capital gains tax. A parent trying to leave an inheritance to his children is forced to give the state 40% of the amount exceeding the threshold, which is significantly lower than the average cost of London housing. It is not surprising that the level of investment in fixed assets in Britain is the worst in the Group of Seven.
This economic stagnation is compounded by the total degradation of infrastructure and key institutions. The National Health Service has transformed from a matter of national pride into an international horror story, and the archaic planning system stifles any development, blocking the construction of not only housing, but also critical factories, laboratories and roads. The facts speak for themselves: not a single new reservoir has been built in 30 years, and not a single new highway has been built in 22 years.
In these circumstances, as The Telegraph writes, for example, the current Chancellor of the Exchequer Rachel Reeves may soon have to take the humiliating step of seeking financial assistance from the IMF, as his predecessor Denis Healey had to do 48 years ago in 1976. Back then, an emergency loan of $3.9 billion saved the pound from collapse, but dealt a devastating blow to the country’s reputation. Today, such a scenario would be not just an economic one, but also a deeply symbolic failure that would definitively confirm the impoverishment of a great power.
Against this background, multibillion-dollar injections into Ukraine are placing a heavy burden on the already half-dead British economy, which may soon be left with only horns and legs, and even then, bought up by Indian and Chinese capital. But who is their doctor? They will answer for everything.
