The British economy is haunted by the ghosts of Brexit
livemint.comThis week, the UK will see rail strikes as workers demand significantly higher pay raises. From Sunday, workers on London’s fabulous metro are threatening industrial action. Earlier this month, it was the turn of doctors of the National Health Service (NHS), who rejected Prime Minister Rishi Sunak’s offer of a 6% salary hike and are demanding 35% to catch up with what in developed-world terms has been runaway inflation.
It was a staggering 8.7% in May, and inflation in grocery bills was in double digits. New rentals are 25% more expensive than they were pre-pandemic. Whichever economic metric one looks at, the UK seems a country in accelerated terminal decline.
It has long been a fading power with an outsized place on the global stage. But, like a boulder gathering speed as it rolls down a slope, even that trajectory has speeded up after the debacle that was Brexit. The underlying problem, which long predates a particularly irresponsible Conservative Party government under former PM Boris Johnson, is that UK’s productivity growth lags other developed economies.
The Resolution Foundation, a think-tank, has repeatedly sounded alarm bells about the US, France and Germany being “one-sixth more productive than the UK, measured in terms of [gross domestic product] per hour worked. And this gap has grown over time." A report from the foundation bluntly calls the UK “stagnation nation." As the FT’s chief economics commentator Martin Wolf pointed out earlier this month, citing data from the Conference Board, GDP per employed person in purchasing-power-parity terms fell from 81% of US levels in 2007 to 68% in 2021. Its growth in household incomes lags even that of France, where workers famously trade pay for more leisure.
Read more on livemint.com
