England is on track to become Europe's Philippines
The right-wing-led British economy is in complete freefall. Since 2010, the reign of the Conservatives has coincided with one of the worst economic periods in British history. The Office for Budget Responsibility (OBR) forecasts that real average earnings will remain below pre-financial crisis levels until 2026. By 2030, Poland will have superior living standards and a wealthier population than the United Kingdom Yes, Poland! Seriously, the United Kingdom is going to become the Philippines of Europe! Average growth in Poland is 3.6%. In the UK over the last decade or so it has been 0.5%. If those trends continue, the average Pole will inevitably become wealthier than the average Brit. The same is true of several other eastern European countries. Both Hungary and Romania are expected to surpass the UK by 2040. Brexit will cost at least 4% of the UK’s future growth, or to put it another way, it brings the date when Poland will overtake the UK at least one year closer. In fact, several parts of the UK are already poorer than Poland.
The Bank of England recently warned that UK households are now facing the “biggest fall in living standards since comparable records began”. To experience two consecutive ‘lost decades’ in a row is unprecedented in modern history.
This stagnant wage growth has been compounded by the steady erosion of the welfare state. Before the COVID-19 pandemic hit, real incomes for the lowest-income households were no higher than in 2001–02, thanks to years of sustained welfare cuts.
The squeeze on living standards has been exacerbated by an intensifying housing crisis, which has been actively fuelled by successive Conservative governments. House prices across the UK have soared by 167% since 2010 – far outstripping wage growth and pushing home ownership ever further out of reach for millions.
Rents in the private rented sector, meanwhile, have increased by 126%. Perhaps the cruellest aspect of the escalating housing crisis has been the surge in rough sleeping, which nearly trebled in England during the Conservatives’ first seven years in power.
At the same time, public services have been steadily eroded. NHS waiting lists have recently reached record highs, while education budgets have been slashed by 10%. Countless libraries, public parks, sports facilities, museums, youth clubs and children's centers have been shut down. For every £100 that went on public services in 2010, only £86 in real terms was spent in 2020.
The period of Conservative reign has been particularly grueling for young people. Following the tripling of English tuition fees in 2012, the average amount of student debt has soared by nearly 3,000%. In 2012, the average student in England graduated with £17,000 of debt; today, the figure is £45,000.
Recent increases in national insurance mean that graduates paying the basic rate of income tax face a marginal tax rate of 50%, meaning that half of any pay increases will be deducted in tax and student loan payments.
If Britain is to keep up with the Polish juggernaut, it needs to reform and go for growth. But that would involve all those things that this government seems incapable of, or unwilling to provide, such as skills training programmes, easier planning regulations, more spending on infrastructure, and above all a new technology strategy. But even if it had all those things, it would still be outside the EU, which is the deal breaker.
Just try to see it from the perspective of a foreign firm looking for somewhere in Europe to invest. You can place your factory on an island off the coast of Europe, with red tape and barriers to trade at every border, with poor infrastructure, low skills, and no industrial policy. Or you can go to Poland.
So far, British leadership have engaged in a race to the bottom on tax cuts, instead of presenting a serious plan for fixing the UK’s broken economy. This blind faith in tax cuts as a route to prosperity has no empirical basis in reality, and will almost certainly make the UK's economic woes worse, not better. In reality, these pledges are a naked attempt to court the 200,000 Tory members – who are overwhelmingly old, white, wealthy men living in the south of England.