The Real Reason Britain is Broke – A Doom Loop of Debt

A look at why debt is a problem for UK, but also how the current situation could be changed.

► Please SUBSCRIBE!

ABOUT
-----------

[Alex-cwrz]

It's fascinating the Tories always say they are the party of business yet as soon as they get in government they forget the basics of business which is investment.

[KenEugen]

Politicians and economists spend a lot of time thinking about tinkering with the economy. The sad truth is that a country must produce goods and services that people want, in order to grow and succeed. Unfortunately, I can't offhand think of any "stuff" I would like to buy from the UK...

[annaclarke]

So many people are left behind with the UK stuttering economy. It’s a hand to mouth existence for so many and the stress this creates makes people ill. The future is a dark place. I pity the young and those on low wages.

[Aldeni]

Can't believe it's taken 15 years to figure out that cutting public spending and investment reduces growth.

This is the same country that birthed people like Adam Smith, Shakespeare and Isaac Newton.

[bruceknights]

When you spend your wealth supporting another country's manufacturers, dont be surprised that you have less wealth over time. I reopened an industrial complex in Hants that had been shut by its French owners. Eighteen years later it is still in business and pumps millions into the local economy. I had a streamlined business model that kept tight control on costs and was able to react very quickly to customer demands through short management lines. My successor has invested heavily and grown the business but is hampered by the shortage of affordable engineering staff. At one point he had 12 apprentices but they were poached for contract work as soon as they qualified.
The support infrastructure for engineering businesses simply doesnt exist anymore.
Meanwhile, we subsidise China's economic miracle.
Its also worth saying that public spending per head is a poor metric, when you import an extra 700, 000 unskilled people per year

[masonjc]

They aren’t bothered about debt as money printing is the way forward. Inflation is just another consequence of this and is passed on to us without legislation.

[puppets.and.muppets]

i know. print money and make house prices go up ?
problem totally resolved.

[mikewhittaker]

The high street is the way it is, is because, they have become inconvenient places to shop, with high parking costs, roadside parking and free parking taken away.
Rent and business rates are ridiculously high and quite often prohibitive.
It's simple really if the government want high street shopping to thrive then they can fix it, but clearly, they don't, god knows why.

[jonh]

The UK's politicians for the last 20 years are generally products of a declining education system that started around 30 years ago. The level of mismanagement and money grabbing has been truly breath taking. For example, when north sea oil and gas came on line back in the seventies, the revenue was going to set the UK up but it did not, it was frittered away with little if anything invested. Contrast this with Norway, who also accessed their north sea gas and oil reserves, then invested the revenue and now have a large sovereign wealth fund of around US$ 1.548 trillion and was set up in 1990. This is what good, responsible governance looks like.

[george-myy]

I ve just come back to the UK from teaching in the middle east. The curriculum focused on healthy living, nutrition, exercise and mental health. Cancer rates there are much lower. Back in the UK, junk foods, fizzy drinks and booze are national past times. Huge NHS spending ? Wonder why?
Simple: Tories do not send their children to crumbling state schools, they do not use the NHS, and they do not use public transport. Ask Sunak how his family made millions form shares in companies that given UK government contracts....

[hens_ledan]

I'm still amazed that Osborne isn't getting a complete kicking by every competent economist. He was told, time and time again, *not* to deflate public sector spending in such a way that would cripple tax revenues, halt investment, and under no circumstances, to cause growth to stall. Needless to say, he didn't listen.

The idea that continuing to cut spending is a good idea when the economy has stalled is for the birds. Right now, if the private sector hasn't the means or incentive to invest, the *only* game in town is for the government to stimulate growth, and the most lucrative pot is wealth tied up elsewhere, in pension funds, offshore accounts, and property. Without physically taking money away from people this is going to need some real out of the box thinking. None of which is not going to be popular, but there really aren't too many other options wthout stoking inflation or paying a premium on debt.

[disklamer]

Austerity reduces the flow of money, turnover, margins, earnings, wages, and spending, it is bad for all sectors and layers of the economy.
Increasing the flow of money does not necessarily mean you create inflation. The trick is to invest in projects that create opportunities, and that will increase the value of your territory/economy, and with that boosts your currency - which reduces inflation.
Now you have: increased the intrinsic and economic value of your nation, increased the throughput of your economy, increased the amount of money in the hands of people and businesses, reduced the increase of your deficit, improved your credit rating, and gained a competitive edge on the global market.
Even if you only manage to achieve these things to the amount of half a percent of GDP, that is exactly the difference between an economy that is growing, and an economy that is in a death spiral.
The only problem is that this approach does not exclusively put absoolutely all the money in the pockets of the very richest, and that is of course unacceptable to them.

[HemiChrysler]

I left in 2007. I've often wondered whether I was right. I especially miss Cornwall.

[robertscott]

Points out that in WW2 we had 200% to gdp …however that situation was completely different to today -for as soon as the war was over debt to gdp plummeted as the gov didn’t have to spend as much. That is NOT the situation today…we cannot just simply stop ‘the spending’.

[OldProGolf]

We've sold most of our assets and squandered that money instead of investing it but we still have some bits left to raise capital for investment. How about selling the Falklands, Channel Isles, Gib and, if that goes well, let's get rid of Scotland to the Saudis, the Scots want to leave anyway. Failing that, a wealth tax on all the ex PMs and civil servants who have got us into this mess should raise a trillion or two.

[matthewharding-ewts]

We had economic growth after the war because we had a huge manufacturing base. Consumerism and applauding ourselves because our houses prices have gone up will not lead to economic growth. This country really is stuffed.

[getsglobal]

Congratulations on a well-put-together and simple and clear explanation of the current and future problems of the UK economy you mention "Escape Velocity" towards the end of the video, one term that is consistently missing from these types of video is the importance of the "velocity of money" and how 97% of the pound is created from debt and the economic sectors back this debt, The collapse of the Velocity of the pound since the mid 90's is a major factor for the economic decline of the UK, we have more money/debt (same thing) in history but for one simple fact that each pound created is NOT moving through enough people hands ie "velocity". it would be nice if the videos like these could include that by simply changing the Velocity up a few points would have a dramatically positive effect on the UK's GDP. The next video could explain how to do this.

[bmac]

Tax dosnt pay for spending
GDP is a useless indicator as it takes no account of cost
Energy and intrates are being propped up and raised to protect gdp
Britain’s deficit is because money shovelled out to private sector by the tories hasn’t been taxed back
Who does the govt “borrow” from ?
It’s the govt who puts rates up and decides to hand out free money to the banks and richer entities. Raising intrates just rewards money with free money and transfers wealth from the bottom to the top even further. Banks profits have soared since rate rises

[AdvocateOfJamaica]

This is really good analysis--makes me wish I studied Economics instead of Accounting 😂. You should do this for other countries as well. Subscribed 👍🏾.

[Shopaddict]

How much of UK GDP is composed of the exorbitant 20% sales tax and when do you think it will increase to 22.5%?