UK faces worst downturn of any advanced economy, OECD says | Hacker News Reader

UK faces worst downturn of any advanced economy, OECD says

bbc.co.uk

As bad as this was for the UK, I suspect the rest of Europe is about to go through far worse as their energy and chemical inputs from Russia haven't even been completely severed yet. Once that happens, I fear that their economy might completely collapse.

There have been some concrete advantages to Brexit:

- Regained control of borders. This is going to be an increasingly important issue going into the 21st century as Africa is going through an enormous population boom. -No longer on the hook for the debt of certain EU nations (Italy and Greece being big ones)

It'll be interesting to see his this shakes out over the next decade. If the UK achieves some degree of freetrade with the EU while regaining control of borders and a more independent ability to adapt to changing conditions, they could still come out of Brexit up. And tbh a few hits to the City and London area aren't necessarily a bad thing imho. The rest of the country needs some serious attention (Scotland as an independent nation would very possible have the worst social and economic outcomes of all Europe).

https://capx.co/britain-remade-a-new-campaign-for-economic-g...

Some of the proposals here would be a good start for the UK. There is no reason the UK can't flourish but it will need to make some overdue changes. And London needs to realise that like it or not they are the capital city of the United Kingdom, not a city state alone.

Maybe they should do a brexit 2 to make isolate themselves from the UK union

The problem with this plan is that “the UK coming out of Brexit ‘up’” would be meaningfully bad for the EU if it encourages other countries to follow. And at the same time, the party with the greatest power to determine free trade agreements between UK/EU is the EU itself. This always struck me as the worst paradox of the whole idea: you’ve created an adversarial zero-sum environment where a much more powerful opponent determines your success.

In practice it doesn’t look this will even be an issue, since Brexit is already producing such bad results and losing popular support as demographic changes wipe out its base of support.

I feel as if this is putting the cart before the horse. If a brexit is a net benefit to countries, then they should leave the EU. There is no problem unless the country is ideologically attached to the EU.

> In practice it doesn’t look this will even be an issue, since Brexit is already producing such bad results and losing popular support as demographic changes wipe out its base of support.

We shall see. Remember that when rejoining the EU are going to try and get the best deal possible for themselves. I think you'll find that public sentiment can turn very quickly under such circumstances.

You are also assuming no problems in the EU (such as an Italian debt crisis) meaning that rejoining has real negative downsides as well.

The final process to rejoin the EU would at a minimum look like this:

- Referendum on rejoining EU - Negotiations with EU on what exactly that would mean - Some sort of deliberative process to determine if rejoining under these conditions is acceptable.

This will not happen for another decade at a minimum. And a lot can happen in that time. And if part of that agreement is the UK loses control of its borders again then I would bet money on no agreement being reached.

The underlying assumption in this entire comment is that the EU will want the UK back.

Does the EU want the UK back?

I would say the underlying assumption is that the EU will want a free trade agreement (or some variation of one) with the UK for their own benefit. And considering the mutual advantages here I think this is a fair assumption to make.

It’s also in the EU’s interest to make the UK a pariah. A lesson to others on the dangers of leaving the bloc. I don’t see the EU caring so much about restoring free trade with the UK. It would present an image of groveling and send the wrong message.

Italian debt crisis? You mean that the EU will bail out German and British banks like with Greece?

Remember, the debtors aren't being bailed out, the creditors are. Otherwise creditors would import products from these countries and be made whole very easily if it was about bailing out the debtors.

While it’s quite possible for the UK to mitigate the effects of Brexit and attempt to find positives, expecting that to happen under a Conservative government is, frankly, laughable based on the last decade of evidence.

The idea that reduced prosperity in London world somehow cause more attention to be given in underserved parts of the rest of the country makes little sense to me either. M

The NHS budget was 100 billion pounds in 2015 and is now 136 billion pounds, which means a 692m pound weekly increase in spending.

One of the pieces of fearmongering from anti-Brexit campaigners was that the NHS would be starved of resources and would not receive adequate funding.

Now that it's been proven a lie, anyone against Brexit claims they never made those statements.

In fact, one of the most lambasted pro-Brexit selling points was additional NHS funding. It actually happened.

£100 in 2015 is equivalent to £131 today due to lost Pound Sterling value.

The 131 is the budget for 2021/22, which was before the massive spike in inflation. The inflation between 2015 and 2021 is only 15.7%, meaning the budget has been raised by 15 billion pounds a year above inflation figures.

It doesn't really seem like a fair comparison if 2022 alone (after the budget was already set) had more inflation than the preceding 6 years combined.

In fact, the NHS budget is rising substantially by 2023/24 to counter-act the recent inflation events -- to 160 billion. [1]

This would mean the NHS budget has risen by 60% between 2015 and 2023, outpacing inflation substantially to an increase in real terms.

Just to put this in perspective, the pro-Brexit campaign was mocked for "falsely" promising 350m pounds a week in additional spending, when the spending increase is already double that and is scheduled to quadruple by 2023.

[1] https://www.kingsfund.org.uk/blog/2022/11/autumn-budget-2022...

What if healthcare labor supply and demand curves are moving in such ways so as to necessitate price increases that outpace overall inflation?

For example, due to an aging society with more and more healthcare receivers and proportionally fewer and fewer younger healthcare suppliers.

You can't think of anything that might've happened between 2015 and 2022 that would have required healthcare spending to go up?

And how does it compare as a percentage of the national budget between then and now? Government spending as a whole went up in the past 2 years.

> No longer on the hook for the debt of certain EU nations

That might actually be the first credible benefit I’ve heard

This wasn't really true though. Not being a EuroZone member the UK was not part of the European Stability Mechanism and "The UK is not liable through existing emergency funding schemes".

https://fullfact.org/europe/will-uk-pay-future-eurozone-bail...

We'll see how this plays out. The appetite for Germany/France paying Italian debt is basically 0 and I predict this will lead to some major reformulation in the EU.

When that happens it would be a good time for the UK to propose a freetrade agreement with the EU to help boost economic growth in the continent to make this more palatable.

This has nothing to do with Brexit, it is about the anti-Russian sanctions, specifically the energy sanctions, but also knock on effects.

The UK imports large quantities of oil and natural gas, and these are now much more expensive, which is hitting the UK economy. Nations that are more energy independent suffer less.

The UK, although it has North Seas oil, does not have sufficient quantities of domestic gas production, and even the North Seas oil is a bit tricky because of the refinery situation in Europe is not set up for self-sufficiency -- e.g. the UK exports about as much oil as it imports, with different nations responsible for supplying different distillates, so it's not the case that the UK, when faced with a shortfall of foreign oil imports, can just use its own oil. Long term it can, assuming refineries are built domestically, but not in the short term. But for natural gas, there isn't really a replacement -- perhaps nuclear, but that is very long term.

It's amazing how hard it is for humans to understand compounding growth.

England's GDP has historically grown at 1.5-2.0%. That implies about 20% growth in a decade.

Let's say Brexit leaves GDP 2% lower than it currently is by the end of 2023. Now to grow 22% in 9 years (i.e. get back to even), they need 2.4% annual growth, which is a 20-60% acceleration sustained every year for 9 years just to get back to the baseline.

Less GDP today, in many ways, is less GDP forever.

What makes you think I don't understand compound growth? I do.

I also understand that certain policies can lead to changes that will disturb QOL in a country outside of raw GDP (go ask Swedes how they feel about immigrant behaviour in their country in recent years). Is Swedish GDP up? Absolutely. Is it worth the price of open hang warfare and frequent shootings that have sky-rocketed since 2015? Depends how you look at it but this isn't something that shows up in GDP but has tangible impacts on people's day to day lives.

GDP growth isn't some static figure that will permanently remain low in the UK due to Brexit. There are many tangible real projects that could lead to significant improvements in GDP growth and QOL improvements that have nothing to do with Brexit (transport infrastructure improvement, housing reform, NHS reform etc).

Brexit happened. Maybe it shouldn't have, but it did. The last thing the UK should do is try and rejoin now at a point of weakness especially when things aren't exactly looking wonderful in much of the EU either. Better to engage the rest of the world where possible, spend some time and effort focusing seriously on internal development (including measures to shore up the union so that Scotland won't be driven to make an incredibly self-destructive decision with independence) and then reopen negotiations when the UK is in a better spot.

Despite the doom and gloom we are still talking about a top 10 world economy with world class human capital in many industries, that speaks the global lingua franca, has extensive overseas ties, and a lot of projects that would clearly help improve QOL in the UK. Focus on that first instead of trying to call back a ship that has already sailed.

> The last thing the UK should do is try and rejoin now at a point of weakness especially when things aren't exactly looking wonderful in much of the EU either.

Why though? To save face? What if both the EU and UK would still do better together than apart? At the same time, why would Scotland want to be tied to England who isn't doing so hot?

Scotland is far far worse off without the rest of the UK than the UK without Europe. And Scotland is doing much worse on almost all economic and social measures than England whereas that isn't the case at all when comparing the UK to the rest of the EU.

On top of that one data point is 19% of Scottish exports went to the EU. 60% go to the rest of the UK. Scotland has no ties with any foreign countries (they all run through Westminster), a fraction of the population that would struggle to achieve economies of scale, etc. On top of that there isn't even any guarantee that Scotland would get into the EU (I imagine Spain would block it so as not to encourage Catalonia separatism - check the 2017 Catalan referendum for my point).

Even if you think the UK leaving the EU was the UK shooting itself in the foot, Scotland exiting the UK would be it shooting itself in the head.

-------------------

In terms of rejoining the EU it won't even be able to brought to ballot for at least a decade. All the remain campaign would need to do is start running ads about how EU law will supersede British Law and highlight that the deal the Brits are getting now isn't as good as they one they had (and imply this is being done for vengeful reasons) and watch support collapse. The UK should be aiming for a free trade and economic agreement, not EU membership. That ship has sailed.

I obviously do t think the UK should try to rejoin for the same reason I think you shouldn’t reverse a vasectomy (you made a decision you knew was meaningful for a reason).

But that doesn’t mean the original decision has benefits.

That’s a deceptive analysis because catch-up growth is easier. That’s why the Asian Tigers could grow at breakneck speeds, right until they caught up to Western development levels and stagnated just like everyone else.

What do you mean?

Small base growth is easier (that’s the example you give), but catch-up growth in large economies is damn near impossible.

That’s only because of political entrenchment. If Europe loosened their labor laws and made other reforms to bring them in line with American business law, they would probably catch up to American GDP per capita pretty quickly. As it stands, US GDP per capita is 40% higher then even Germany. Do you think the Germans aren’t capable of producing at the same level as the US?

You honestly believe these differences are duo to internal policy?

This may be interesting to you: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)...

And considering PPP, the US still smokes all the major European powers. What is your point?

It does not seem like you want to give any contrasting explanation so much as a thought.

Your 40% gap turns into an 18% gap. Further more libertarian economies don't look particularly exceptional.

Together this suggest that the differences in GDP are much more easily explained by existing wealth and foreign policy/trade, instead of domestic factors.

>Let's say Brexit leaves GDP 2% lower than it currently is by the end of 2023. Now to grow 22% in 9 years (i.e. get back to even), they need 2.4% annual growth

Why do they need to get back to even? Why is this assumed to be a realistic goal in the first place? This seems to assume the rest of the EU is going to be just fine.

The only things that matter are if the UK will do better or worse than it would have if Brexit hadn't happened, and how they'll do compared to the EU.

Before, Brexit looked pretty stupid, and the rest of the EU looked like they were in a much better position. This is no longer true; maybe the Brexiteers will turn out to have been correct after all. Only time will tell.

> Regained control of borders

Can you elaborate on how that has changed since Brexit? The UK was never part of Schengen and African migrants are not EU-citizens so would not benefit from freedom of movement laws.

EU citizens have rights to freedom of movement in other countries. This included the UK.

While on paper you are correct about the African migrants in reality people were rightly concerned that the will to enforce this was weak. The issues in the English Channel still show this problem exists. And Europe continues to show little desire to actually take action in this problem and so we are seeing similar sentiments arise in Italy as lead to Brexit.

Imho the real blame for Brexit lies at the feet of Angela Merkel. Brexit would never have happened if she hadn't opened the borders in the Syrian refugee crisis. While this was a very open-hearted and kind gesture, as a geopolitical action it was disastrous.

Would the Syrian refugee crisis have been as bad if Britain hadn't hopped in with the US to destabilize the area? You could easily lay that blame on George Bush more than anyone else

Right, and not only Britain. How many Syrian refugees did Russia admit?

Pretty sure civilians flee war wether or not the West gets involved.

> While on paper you are correct about the African migrants in reality people were rightly concerned that the will to enforce this was weak.

I feel like I am still missing the legal context on how Brexit solves such an issue.

You mention issues in the English Channel still exist; just last week there were reports on how there are thousands of Albanians (similarly non-EU citizens) who migrated to the UK illegally. But this is post-Brexit, which sort of indicates that Brexit has not solved the border issues.

I can see the argument that Brexit reduces migration from EU nationals (whether that is a good or bad thing is another question), but I have yet to see any indication that it changed non-EU migration in any way.

On the other hand, over the long run, Britain will lose out by not having the population growth from Africa. Capitalist economies demand that growth to do well.

... And the UK won't decouple itself from Greek debt until the UK decides it shouldn't have imposed the arbitrary debts in the first place

UK will still have immigration from Africa. But at a level that satisfies both GDP growth concerns as well as culture stability concerns.

Not being in the EU doesn't somehow make the UK incapable of accepting immigrants... I swear people are so upset with Brexit they have stopped using their brains in assessing the UKs options.

The problem with kicking out migrant workers (which is effectively what's happened, and what "taking back control" was sold as) is we have major industries unable to hire.

Construction is steeply overpaying low-skilled jobs when it can find people. Care is unable to hire, quickly extinguishing hospitals' ability to discharge and admit. Agriculture has seen a massive seasonal pinch; crops have spoiled because the traditional seasonal workers have been unable (and then unwilling) to deign themselves to the increased bureaucracy.

I know we didn't actually kick people out and we [now] have exceptions for most of the jobs I've mentioned… but that's the effect when you limit movement. Long-term planning and COVID conspired to force people towards certainty. Even the immediate aftermath of the vote saw a massive drop in migrant carers and seasonal workers.

And we still have painfully little control over who crosses our borders. So this "control" you claim we have is both ineffective and smothering this country. It's far from "just" the halving of our financial sector.

Being a member of the EU guaranteed some level of freedom for migrant workers. It was a selling point for migrating in the first place. It's imperative we understand that just offering specific job exceptions isn't enough for lower-skilled jobs, and that our country will simply fail if we carry on letting that work go undone.

I don't disagree with any of this except I don't think Brexit has much to do with it. Countries all over the world (including in Europe) are facing the exact same issue.

Many workers want to come to the UK even now, and yes, even many Europeans.

I don't think in the longrun that British immigrant numbers will go down but now the control is better and the perception of control is higher as well. There is a lot of value to that as politically illegal immigration (or perceived excessive immigration) has a way of sucking all the oxygen away from other issues.

1. Last time I looked no African country was part of the EU, so not sure how stricter controls for EU nationals works in your plan 2. The Uk wasn't part of the EuroZone so not really on the hook for Greece etc. 3. "a few hits to the City and London area aren't necessarily a bad thing" why wold you think losing one of the most Profitable parts of THE UK a good thing, it won't move to other parts of the UK, it will go to Paris, Frankfurt etc. 4. The average cost for ANY company of ANY size to now gain a sponsor license to employ non UK staff now starts at about £20,000, there are now not enough people to do many jobs especially in cities, labour costs (and now inflation) have risen out of control in many sectors causing closures and many firms are just outsourcing any non in-person to other countries. Yes, it would be great to give jobs to "locals" but not Everyone can do Every job!

Neither Europe nor the UK are willing to alter their asylum laws enough to disrupt the trade of the people smugglers. The control of borders is illusory if human waves can get onto your shore in boats and the courts strike down most countermeasures, so whoever comes, stays.

Therefore the population boom in Africa is likely to have a massive effect on European demography anyway, unless the Northern African countries, which are culturally different from the rest of Africa and which aren't particularly happy about being used as transit countries for mass migration either, build some kind of barriers across the Sahara.

> Regained control of borders. This is going to be an increasingly important issue going into the 21st century as Africa is going through an enormous population boom.

Actually it is exactly the opposite. When you were in EU and migrant came in on a dingy or hidden in a truck, you could have return him back to France. After the Brexit there is no such agreement and France can just show you a middle finger.

See https://www.ft.com/content/d9eed579-a6ee-43b2-b2ce-3e8d83908...

Paywall. Can you post the text and date of the article?

If you are in the UK and this is news to you, I suggest that you seriously start looking at the news. This article is referencing the FT article fwiw: https://www.rfi.fr/en/europe/20221028-britain-france-agree-g...

Rejoin eu reverse it

Can't unspill milk.

In this instance, you can unspill a lot of the milk by unwinding Brexit.

The UK won't get back the absolutely insane, sometimes one-sided benefits that they had before Brexit--those are gone permanently.

However, they would get back the unified market and probably arrest the destruction of London as a financial center.

Their re-admittance isn't guaranteed.

I'm ok with London as a financial center being destroyed if it means the rest of the UK gets more resources & investment, and thus wealth spreads more equally.

It's always been wild to me the difference between London & the rest of the UK.

But the pie will be smaller. Much smaller. And there’s no reason to think the average Brit will be getting a bigger piece of it. If anything I’d expect the exact opposite.

That isn't what it means though: it means everywhere getting fewer resources and less investment.

The UK does need to lift up areas outside of London but it cannot afford to do that by bringing London down. Before the pandemic, "London had the highest net fiscal surplus per head at £4,030." [1] If London were destroyed as a financial centre the rest of the UK will necessarily get far less resources & investment.

[1] https://www.ons.gov.uk/economy/governmentpublicsectorandtaxe...

> I'm ok with London as a financial center being destroyed if it means the rest of the UK gets more resources & investment

Wouldn't London becoming less productive mean the rest of the UK gets fewer resources and investment?

Part of the reason London received so much investment was because it was a major source of income. If other parts of the country ramp up economic activity relative to london, they should get more attention.

It's not that unusual a situation. Toronto (with about 30% of Ontario's population) produces some 60% of the province's GDP. Ontario without Toronto would be about as wealthy as Poland, per capita. Perhaps all we're noticing here is that there are tremendous gains in efficiency to packing people in densely in large cities.

I think if they negotiate a treaty with the EU that is purely an economical relationship that might work but migration and the EU parliament's oversight are things a lot of brits still oppose so it would be like getting back together with your ex that misses but hasn't changed much really. I think the UK basically needa the equivalent of NAFTA with the EU.

Large financial institutions and banks are expanding footprint in London, and have announced new office developments after Brexit. So this claim of yours seems to be based on pre-Brexit fearmongering that never came to pass.

I mean, come on, this is easily dis-proven as a talking point. 1 minute of Googling will show it's totally false. [1]

>“London's position in Citi's global framework and strategy is undiminished and is actually growing” [2]

>[HSBC] named three new senior investment bankers within its UK team over the past month as part of an ongoing expansion in the country, according to internal memos seen by Financial News. [3]

[1] https://www.businesswire.com/news/home/20220125006049/en/Cit...

[2] https://www.ft.com/content/7d1be767-0121-45aa-8f94-b3a04ea3c...

[3] https://www.fnlondon.com/articles/hsbc-hires-three-bankers-a...

The UK is still the most finance-friendly country in Europe by far. There were attempts to setup in France etc but regulation is much more onerous and so those plans fell apart quite quickly.

No thanks.

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