UK Fell into Recession in 2023
bbc.co.uk
bbc.co.uk
Median pre-tax weekly earnings are £682 [2], so that's an increase in costs of ~2-3 weeks of wages for the median. It's hard to see that not leading to major economic consequences because it's a double whammy: consumers now have less money, and companies are also paying more as well.
I feel there's a rather giant pink elephant in this conversation.
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[1] - https://assets.publishing.service.gov.uk/media/6582b65223b70...
[2] - https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor...
The energy discourse is a disaster. I remember when there was a protest group campaigning for subsidised insulation; they got clamped down on hard. Mustn't interfere with the gas profits.
Protesters were arrested for criminal damage, causing danger to road users, willful obstruction of the highway and causing a public nuisance.
An injunction was granted prohibiting demonstrators from "causing damage to the surface of or to any apparatus on or around the M25 including but not limited to painting, damaging by fire, or affixing any item or structure thereto".
And even if it was back to £1,300. It would still be the 4th highest energy price in EUR. But I could see this price even come down as more Wind Energy projects ( hopefully ) comes online. And a possibility of costing only half of that in the 2030s.
The UK doesn't look like it's going to rebound for many years, there are now significant structural issues, not least of them being poor infrastructure.
I found this analysis of the UK particularly interesting: https://www.sambowman.co/p/democracy-is-the-solution-to-veto...
Edit: The bulk of the 2008 crisis was handled by the previous, Labour government and the conservatives inherited the debts to deal with. I'm not saying that handling of Covid was good, but looking at other countries it was certainly in the average (and the UK government decisively intervened to secure a domestic vaccine).
The thing is that they've been in government for very long so have run out of talents and are obviously being blamed for everything. Many young people have never known anything else so of course they are the bad guys (on top of young people being on average more to the left). This is an eternal cycle and the same will eventually happen to the next Labour majority.
Now, that's the issue Labour have: They have it easy at the moment, it's all the Tories' fault, the Tories are incompetent, etc. Fine, but at some point they will need an actual plan if only because, again, they'll most likely be in charge within months.
Even Brexit is not exclusively the Conservatives' "fault": The Labour party and electorate were also highly divided on the issue and it was the Labour government of the time that decided against all restrictions to East European immigration in 2004. And I remember how popular they were when they obediently followed the US in Iraq...
Labour even had a good shot as being elected earlier but made themselves unelectable by going far left, and they are still grappling with that.
There is plenty of blame on the current UK government for how they handled the COVID crisis. It even forced out a Prime Minister, albeit for reasons of clandestine office parties, not over casualty rates or PPE corruption scandals.
However it did factor in the amount of deaths caused by COVID.
For their mere existence? No. But they absolutely deserve blame them for how they handled these things, given they affected almost every nation on the planet, many of whom handled each rather better.
Michelle Mone clearly wasn't the only one punting over-priced, poor quality PPE via the special Tory VIP system.
Cumulatively, how much have Tory VIPs taken out of the economy since they came to power?
Even Sunak seems to be in on it. Like the wink-wink "you outsource your IT services to Infosys and we give you new sweetheart oil contracts" deal that BP and Shell got.
I think we have a right to be angry about this. It's corruption.
UK government is outsourcing everything and it's not just Infosys. They set low salary levels and flooded the market with offshore devs in the last few years.
And she got a peerage out of it! Presumably by knowing the right people and paying them.
Neither the Labour govt of the time or the Conservative ones we've had since 2010 were immediately responsible. But the austerity policy pursued by the Tories since 2010 has put the country in an economic death spiral. Pre-gfc levels of education, health and social care, law and order, infrastructure and defence provision are now basically impossible for the country to sustain. I don't see any way back from this in a timescale that doesn't condem my children's generation to poverty and disadvantage.
(And if the gfc was caused by a failure of regulation then every uk government since 1979 bears some culpability for its failure to supervise a major financial market centre.)
The UK has literally become one of those third-world countries where oligarchs buy yachts and fast cars while the population starves.
Who exactly has captured The Guardian, The Times, the Daily Mail, the Financial Times, the London Review of Books, and the BBC all at the same time?
> a non-representative electoral system
that can symmetrically benefit either side.
> feudal traditions of greed and contempt for the lower classes…extended to doctors and lawyers
You can just look these things up: https://researchbriefings.files.parliament.uk/documents/CBP-.... Doctors and lawyers are still overrepresented. The class background of the new sort of Tory (Williamson, Dorries, Jenkyns) is hardly more aristocratic than the members of the professions that preceded them, even if some receive honours.
> The UK has literally become one of those third-world countries where oligarchs buy yachts and fast cars while the population starves.
This describes pretty much any moderately wealthy country in which hunger still exists. The situation might well be worse in the UK but to show that would require use of such difficult techniques as counting and research, rather than hackneyed repetition of old stereotypes.
(There is a huge backlog in the courts system and defence barristers are very under-funded, making the problem worse)
This describes pretty much the whole world. I'm convinced at this point that the dystopia we are all headed for is not 1984 or Brave New World or Snow Crash but something more like Elysium where a tiny minority have everything and get to do whatever they want, physically isolated/insulated from the rest who have nothing and live as subjects.
Which is another downside...
I feel those figures are a better indicator for economic health than GDP growth, which seems to be a fairly loose measurement. But it is still weird that GDP growth tells such a different story.
[0] https://www.ons.gov.uk/employmentandlabourmarket/peoplenotin...
[1] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor...
https://www.resolutionfoundation.org/publications/are-you-be...
The figures hide the fact that most of the population can't afford to buy a property, and the cost of renting - which is not included in inflation figures - has hugely outstripped income.
The population growth rate has also been higher than GDP growth so even when GDP was fantastically growing by 0.3%, it was actually dropping per capita.
GDP is a good metric to tell how the economy is going, but many numbers can be fudged and GDP growth does not mean people are better off per capita.
> Annual growth in regular earnings (excluding bonuses) was 6.2% in October to December 2023
RPI over 2023 was about 10% so salaries are not exactly growing across the board...
You’re right about GDP growth per capita being down (for something like 7 successive quarters, I heard on the radio), and that’s normally the figure considered to best represent living standards. But as you say that’s explainable by population growth, which means it doesn’t count. If it’s new babies being born then economically speaking that’s an investment in the future and clearly doesn’t count as a falling living standards. And if it’s immigration, then I would guess those new people are mostly better off than they were before (or they wouldn’t have migrated), meaning it doesn’t necessarily reflect living standards falling either for people born here or for recent immigrants.
So my armchair analysis is still that the economy is at worst stagnant, and clearly not in recession. Which is actually kind of remarkable given the feeling I get from the news over the last few years of crisis after crisis (pandemic, Ukraine, energy crisis).
[0] https://www.ons.gov.uk/employmentandlabourmarket/peoplenotin...
So 700,000 people just like that in 4 years. That's quite a lot.
Considering that the unemployment rate of 3.8% corresponds to 1,320,000 people, 700k extra would make a big difference to the unemployment rate (which would be 5.8% if those 700k they were counted as "unempployed").
And of course there are the criteria for being "employed". If you are on part-time or zero-hours contract, your hours and thus income can significantly decrease but you're still "employed". So would be interesting to see data on that if there are.
> But as you say that’s explainable by population growth, which means it doesn’t count
Of course it counts. And of course it means that average living standards are falling.
Overall people are producing less per capita on average. So either there is a recession across the board that is masked by the population increase or the new immigrants fill new jobs that are much less productive, which isn't good, either in a country that has a productivity problem.
> And if it’s immigration, then I would guess those new people are mostly better off than they were before
That's irrelevant. It's the situation in the UK that matters.
Yeh, don't worry the people partially responsible for poor quality of life in the UK have already worked to make that option more unviable.
Food was amazing, trading was amazing, funding was nice.
All until the folk of England decided we wanted none of that.
He said that the people who brought us to this state have made it harder to move to the EU (because of Brexit limiting freedom of movement).
Immigration to the US is much more difficult. If you don't have a job offer, or a valid work permit of some kind, a non-immigrant tourist visa is the best you're going to get.
It was kind of a choice after Brexit. Either keep trade deals but leave some EU political influence or do a hard Brexit and screw up the trade deals and business. And then famously:
>Boris Johnson promised to “fuck business”, and that’s exactly what he did https://www.newstatesman.com/business/2022/07/boris-johnson-...
And beyond the direct policies enacted, if you were setting up a business would you chose a country where that was the attitude?
It's just more pronounced in the UK (and I'd expect South Korea) because London is such a dominant city in the UK.
It was one of the first cities in the world, and 30-ish years ago I was taught it was the first.
Usually this was thought to apply only to poor countries, where inequality was very high as the industrial sectors (where GDP growth mostly came from) were heavily concentrated in a few hands. It wasn't as much the case in rich countries where labour was better organized and had a stronger bargaining position when negotiating pay, so GDP growth did feed through to higher wages.
That seems to have stopped in the rich world since the late 2000s. FTSE 100 company profits are up, yet they're pulling out every trick in the book to keep wages at poverty levels.
(often quoted to make a point about the parochialism of a lot of English politics and its inability to compare against other, distant, foreign places such as Manchester)
Given it's been at a low ebb since the pandemic, there is a bit more buzz about the city again.
That said, there could be a huge collapse coming later this year but after so much negativity for so long, things may change. The new government should help that (even if they don't do anything!).
So you can't find a job to pay the rent, while the rent is at a historical high relative to earning.
But the UK has serious energy problems; I'm a squeaky wheel on the topic but their per capita energy figures are estimated to have dropped 30% from peak [0]. You can't startup your way out of a hole like that, someone serious needs to do some capital investment. The UK's energy policy is a sick joke.
A startup involved in helping people to live energy efficiently would probably go great and be a real boon to the people; but it isn't addressing the root cause of the problem here. The squeeze is real.
[0] https://ourworldindata.org/grapher/per-capita-energy-use?tab...
Unless you leave the country, the 'serious energy problems', whatever caused the bad economy, and anything else in the country are still going to be present if you don't start a startup?
Are people just deciding not to spend their extra income? Everyone I know seems to be doing fairly well right now honestly, especially now that energy prices are coming down.
The job market isn't great, but that's really the only thing that I've seen that looks recessionary? And either way unemployment is still low.
It's about the cost of housing / basic necessities sucking up money from the middle classes. The money accumulates towards assets so people who own them don't notice anything is wrong (quite the contrary)
https://www.theguardian.com/society/2022/may/09/more-than-2m...
(anyone blaming poor people for badly managing their finances can be dismissed out of hand; this is a multi-century-old excuse that is simple ignorance)
Well that's an interesting statement, considering that the fast food, alcohol and gambling industries are booming in the UK.
Wages - not so much.
"Then people should just buy a house to protect themselves from poverty" - Chancellor of my country
When I realize I should have bought a home in 2012 instead of being in middle school.
Yeah, we all start with the same opportunities.
Do they? I certainly haven't had an inflation-matching pay rise.
But I had to move jobs 3 times in 2 years to get those raises.
And honestly, it still doesn't feel like enough.
Tell me 5-10 years ago I'd earn £75k and I'd think that was going to be amazing, now a £75k salary kinda just feels like an average salary. And I have no kids! I don't know how people on average salaries with children are coping at all.
Median income is about 35k, which means half the people earn less and you earn more than double that with less expenses.
> I don't know how this is possible. State pensions and universal credit went up 10% last year and will be going up another ~8% this year.
(For those not in the UK: 'universal credit' is not UBI, it's state benefits - 'universal' in the sense of replacing various specialised benefits (housing, job-seeking, ...) that came before it.)
i.e. if you're 'actually' struggling (not just like, stressed about money while you sit on your new sofa and watch TV comfortably warm and then open the window because you lit the fire and now you're too hot (occasionally guilty!)) then you ought to be less struggling now and going forwards than a year or so ago, I think is the point.
Lots of people live close to paycheck to paycheck, not having any savings for emergency’s. It certainly stops any optional spending for both households and companies.
> but most people have a lot more money coming in to make up for that...
Absolutely not. Honestly, I can’t fathom how you have such a warped view of how the average person is doing. Your social circle must be exclusively asset heavy, mid-high income folk, which is far from most people.
My partner and I have combined income of >100k and are significantly worse off compared to a few years ago.
Like you I'm personally worse off for sure with tax increases and mortgage increases, but obviously most people don't have mortgages, pay much tax, and most people get help with things like fuel bills.
I guess I'm just surprised that given how much extra money the average person is getting that the economy is doing so poorly. You're right, I might be out of touch though... All I'm saying is that this doesn't align with what I see personally, and I'm surprised given the extra income most people are getting that there isn't more economic activity, but clearly I'm wrong.
No they don't? What are you referring to?
There really is not a lot of extra money coming in once you properly account for inflation. Energy and fuel inflation has hit productivity of businesses pretty hard as well as individuals.
Most people do either have mortgages or pay rent which pays their landlord’s buy to let mortgage on the house they live in. Mortgage rates and rents have both spiked very sharply. Along with energy bills that’s a huge chunk of most people’s expenses.
Most people in the UK either have mortgages or pay rent (and rent tends to be more expensive than mortgage payments)
> and most people get help with things like fuel bills.
... Are you under the impression that most people in the UK are pensioners?
> given how much extra money the average person is getting
This just isn’t reality. Price increases have been far greater than pay increases, it’s as simple as that.
The country is currently utterly fucked - even if Labour make sensible decisions I think we are looking at a decade or more and we know that once they've been in for a couple of years the media will do it's usual hatchet job to lay the blame at their feet - the tories are still blaming labour and they've been out of power for fourteen years.
Meanwhile, wages are not remotely keeping pace.
Outside the uk hn bubble many, many people are struggling. Rent, gas and electric, food are all very expensive. Most wages haven't risen anywhere near inflation for years, never mind exceeding it.
Fourteen years of austerity topped off by brexit and a succession of incompetent governments and a pandemic - and the country feels like its on its knees to me.
It's basically Detroit around 2000. And without free movement to the EU, there's nowhere to go.
What extra income? You sure you live in the UK?
Those are exactly linked to CPI inflation: https://commonslibrary.parliament.uk/research-briefings/cbp-... , so no net increase.
Energy is probably the most critical one: https://www.ons.gov.uk/economy/inflationandpriceindices/arti...
"Around 4 in 10 adults (41%) who pay energy bills said it was very or somewhat difficult to afford them." "Meanwhile, around one in five (19%) adults reported that they were occasionally, hardly ever, or never able to keep comfortably warm in their home in the past two weeks"
> Everyone I know seems to be doing fairly well right now honestly
We're not representative of the general public here.
My personal theory is it's the continual lack of real investment, public or private, which is biting. Capital assets gradually wearing out, while the productivity per person falls.
State pensions, UC the rise in minimum wage and the rise in the NI threshold all benefit those on the lowest incomes the most.
People with unearned (investment income) income are mostly OK too.
The problem is more of a squeezed middle one. People with nigh mortgage payments relative to their income. People paying more tax on an income that has increased in line with inflation (regardless of whether you moved into the standard rate band, or are paying more higher rate). People who ran up debt during covid and its aftermath.
A high proportion of people on HN.
Wonder how long this will last …
Which would be different reason to the UK, which never had a competitive manufacturing industry in recent decades.
With talks of Irish unification I wonder how long the UK can survive as a major economy. Will the scots abandon the sinking ship too?
There will never be a precise answer, and even if there was, someone would deny it for political reasons, but here is an estimate:
"Britain’s decision to leave the European Union has hampered the economy to the tune of 5% versus other comparable countries, the estimates showed."
https://www.cnbc.com/2024/02/14/brexit-has-sliced-5percent-o...
In any case, would any of those NATO interferences be desired? I mean this by the local governments, but also by the rest of NATO and the world in general?
Would there really be any political will inside of NATO to interfere?
As per definition Scotland doesn't have any army, because defense is not a devolved matter.
On a practical level the nuclear submarines of the UK have their port facilities in Scotland.
On an even more practical level: Good luck to trying wrestle those away from the Navy of course. Everyone assumes that they would be repositioned in case of a secession. In fact a retired admiral opined that they would be moved either to the US or France in case of a Scottish independence[1], because England lacks the necessary port facilities.
> How would they survive the UK making an Article 5 declaration?
Nobody with half a brain talks about a violent secession. More like something where the people of Scotland declare in a referendum that they don't wish to belong to the Union any more, and they are let go freely. Similar to the Brexit process.
1: https://www.theguardian.com/uk-news/2021/apr/26/trident-over...