The 2022 UK Economy In A Nutshell
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The state of our economy is something that many people have been talking about for some time now. It seems like every day we are reading or hearing news of more and bigger stories of economic collapse. We seem to be in an endless cycle where everything is collapsing and nothing is working.
There are several reasons why the economy is so bad, but one big factor has little to no discussion. This article will talk about it! So let's get into the details of how terrible the UK economy is and what can be done to fix it.
Bad loans continue to pile up
We all know that credit card debt and personal loan debts are a huge problem for individuals and businesses in the United States and other developed economies.
But what if I told you that such large scale borrowing was just as common here in the UK? And not only that, but even worse, there were few tools available to help people deal with these growing liabilities.
In fact, back in 2008 when the banking crisis first hit, experts warned that excessive levels of lending would create a new type of financial catastrophe.
These risks didn't become apparent until much later, however. Now they're here in force, and we need to prepare ourselves for the tsunami of bad debt that's coming.
UK economy is still growing
Despite some hiccups, the British economy is doing just fine. In fact, it’s experiencing its strongest growth in years with employment rising to record highs and GDP increasing at a steady rate.
Since the Brexit vote in June 2016, Britain has enjoyed an economic recovery that hasn’t been seen since comparable timeframes were established. Between March and September this year alone, gross domestic product grew by 0.6% — its best quarter of activity since early 2014.
That figure doesn’t include the effects of last month when the country exited the EU. But even if we exclude those two months, the most recent data show that quarterly GDP was up 1%.
While economists agree that the uncertainty caused by the referendum had a negative effect on business investment, they also emphasize that exports actually increased during that period.
So while the economy did slow down slightly as businesses held off from making big purchases, there isn’t much evidence to suggest that overall production slumped.
The UK economy has been shrinking since the Brexit vote
Following the referendum in June, when voters decided whether or not to remain within the European Union (EU), Britain then had to negotiate its exit from the bloc. This process is known as ‘Brexit’ and it will take two years for this to happen.
During those two years, the British government will need to agree on how to handle trade with EU countries, what tariffs would be applied to imported goods and which ones would be avoided, and so on.
Until that happens, the country cannot actually leave the EU. As such, one of the first things politicians have done is to declare an economic emergency – the worst possible situation you can find yourself in.
This means there is a state of war happening between Westminster and Brussels, which usually leads to people acting aggressively towards each other.
It also creates a very hostile environment where businesses are reluctant to invest, and individuals are even more hesitant to spend money due to fear of being ripped off down the road.
The UK economy is about the same as it was in 2008
Following their vote to leave the European Union (EU) back in June, Brexit has been anything but smooth sailing for Britain.
Since then they have had to negotiate with over 70 other countries around the world, find new trade deals, and figure out how to survive without the second most important bloc in the EU – the common market.
In fact, things are so bad that some economists say we’re already in a recession!
A recession is defined as two consecutive quarters of negative GDP growth. That means if you were buying and selling products at a steady rate, you would need to do the opposite during those three months.
No one can be certain what will happen next, but many predict more downfalls for the British economy. Some even warn us that we could see another financial crisis soon.
The UK economy is about the same as it was in 2012
Following the vote to leave the EU in June, many pundits predicted that the United Kingdom would see a sharp economic downturn. They said that leaving the European Union would be disastrous for the British economy, and that Brexit would cost us large sums of money due to an exit fee or even trade restrictions with our closest allies.
Many also pointed out how dependent the British economy has become on exports to Europe, and said that without this flow of goods and services, the country would suffer significant damage.
However, according Social Entrepreneurship Professor Colin MacLaurin at San Francisco University, there’s no evidence to back up these claims. In fact, he says that the exact opposite is true!
He notes that while the British economy is certainly not doing well right now, it’s actually much healthier than it was five years ago. Back then, things were far worse-the GDP per capita (a measure of wealth) was $6,400 in 2016 versus $52,700 today.1
Furthermore, his research shows that since 2010, when the recession officially ended, the average person only recovers about 5% of their net worth — meaning they lose almost half of what they have!2
So why are we still suffering from a deep depression? Here, Professor MacLaurin offers some potential explanations.
The UK economy is about the same as it was in 2016
Following the vote to leave the EU back in June of that year, many experts predicted a recession. They were wrong! Almost two years later we are still standing tall with an even bigger market than before.
The UK’s GDP grew by 0.6% in Q4 2018 (December to February) compared to the same period last year. This means the economy expanded by just over $1 billion ($879 million) during this quarter – which some claim is the largest one-quarter growth ever recorded!
It also means that at the end of December there had been no official recession since March 2009. That’s seven years without one!
But what does this mean? Well, for a start, people will be more reluctant to spend money if they think the future looks poor. So although the economy seems fine now, you never know when things could go bad again.
And remember, a few months down the line, someone might decide to pull the pin on the economic bomb and make a recession happen then.
The UK economy is worse than it was in 2009
Following the Brexit vote last year, many experts predicted that the United Kingdom would soon enter recession. This has now come to pass, with economists agreeing that we are already in one.
A recession is defined as two consecutive quarters of negative GDP growth. We have now hit this stage, which happened just over a year ago, when Q4 2018 finished with -0.2% growth compared to same period one year earlier.
In fact, according at the end of March, our annual economic growth had dropped from 3.5% to 1%.
That’s not good enough for an economy with so much momentum ahead of us after staying within the EU. We need to get growing again quickly to ensure Britain can recover properly.
But even if you ignore the brief downturn we experienced last autumn, the UK economy is still very weak. It grew by only 0.7% in 2017, its weakest performance since 2012.
And while there may be some positive developments happening (like house price rises), most parts of the country feel like they are falling behind economically.
This article will look at why the British economy is in such poor shape right now, what could be done about it, and how likely it is to improve in the future.
The UK economy is worse than it was in 2007
Following the vote to leave the EU, many feared that the British economy would never recover. Many economists agree with this claim now.
Since the Brexit referendum back in June 2016, the British economy has been struggling to grow. Since then, GDP growth has averaged less than 2% per year – its lowest level since 2011. This slow recovery isn’t just bad for the country as a whole, but also for every individual within it.
Many experts believe we are still in an extended period of recession. This means there will be no swift turnaround until at least 2020 when most predict a return to growth.
At the very least, the next few years will see the slowing down of economic activity. More people will be left without jobs and income, which can have long-term effects on mental health and wellbeing.
The UK economy is worse than it was in 2003
Following the vote to leave the EU back in June, many feared that the British economy would never recover. People are still worried about the state of our finances several months later, and there’s little hope for a turnaround anytime soon.
We have now reached the one-year anniversary of the Brexit referendum, and things seem no closer together than they were then. In fact, some indicators suggest the situation could be getting even more dire.
Experts say we are already in a recession, which is defined as two consecutive quarters of negative growth. We may well already qualify this due to what economists call “technical recession.” This occurs when an economic downturn becomes prolonged enough to negatively affect activity.
Other signs indicate that the economy is struggling to grow at anywhere close to its potential level. This includes lower levels of business investment, reduced numbers working, and people saving less money compared to before the election.
In fact, average monthly savings fell from over 10% of income back in September 2016, just before the presidential elections, to around 5% since then!
What makes matters even worse is that most experts agree that the worst is yet to come. Even if growth picks up quickly after the current slump, Britain will likely remain in a depressed state for years to come.