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For the last 20 or 25 years the UK has been coasting on the North Sea oil&gas money, I'd say that worked up until the early 2010s, and then on the almost complete financialization of its economy and on selling out whatever pieces of the economy could still be sold out (that includes part of their beloved NHS).

But that can only work for so long and is beneficial in the medium to long-term for a very limited number of people (basically the owners of said financial capital), at some point you have to produce some real wealth, wealth produced from real stuff via resources of the Earth + human ingenuity and, yes, + human work.

I agree, but my point is that the France, Germany, and other comparable European economies have the same or similar problems. The UK is not some exception, it is a typical western economy. The US is an outlier (doing better).

> that includes part of their beloved NHS

A more severe problem is that the NHS was debt funded (mostly through off balance sheet debt) in the 2000s. The government kept their promise not to increase national debt by disguising running up disguised debt in the NHS

Its also worth noting that a large chuck of NHS services, GP services in particular, were always subcontracted to private providers.

Germany was quite fine until a couple of years ago, mostly thanks to very cheap Russian gas. About France I agree, they have the same problems as the Brits do, maybe because they lost access to cheap African mineral resources as a result of Francafrique [1] ending? I couldn't tell, to be honest.

But at the end of the day the point remains that if you want to have a world-beating economy you need to have access to relatively cheap inputs (which includes energy), in large enough amounts, otherwise your economy will just not make it. The Americans have that (people forget how much of an economic boom gas fracking brought with it), the Chinese have that (thanks to its very large population and access to natural resources that is reasonable enough, they're no 1930s Japan), India has that (thanks to its very large and young population), even Russia has that (thanks to its natural resources), meanwhile Europe has almost no demographic advantage and almost no natural resources left to exploit. "Innovation" (which is also lacking) and financialization alone can get you only so far.

[1] https://en.wikipedia.org/wiki/Fran%C3%A7afrique

Germany's number one economic problem is energy costs. Blaming the increase on Russian gas hits only a tiny slice of the problem.

The real problem is a completely botched "energy transition", which deprecated very important energy sectors, which were still absolutely needed.

To be clear, I am in favor of renewables. One benefit is that they create independence from the whims of the US and Russia. Nevertheless the transition has been completely botched, driving up energy costs and making certain industries essentially non-viable.

The government focused on two things, increasing renewable peak production and deprecating nuclear. What they completely neglected is how to actually have a sustainable grid, which can cheaply deliver energy even with little sunshine and little wind. What was needed was easily regulated power (e.g. nuclear) and sufficient storage. Nuclear was completely abandoned and most government incentives were focused on increasing peak production, neglecting the storage of energy.

This is obviously harmful to the German industry, which is electricity heavy. This problem has also been consistently ignored and actively made worse in recent years, by continuing to shut down nuclear plants, even if it was clear that more energy production was needed.

While legislation restricting innovation is a problem, Germany, France, Italy, Spain, United Kingdom, all have the same bigger problem of expecting smaller and smaller working populations to support bigger and bigger non working populations.

In the long term, the level of wealth transfer in these countries is not sustainable, and each year it incentivizes those who produce to seek greener pastures where they get more rewards.

Look at these population histograms:

https://www.populationpyramid.net/united-kingdom/2024/

https://www.populationpyramid.net/germany/2024/

https://www.populationpyramid.net/france/2024/

https://www.populationpyramid.net/italy/2024/

https://www.populationpyramid.net/spain/2024/

You could outgrow the problem, by increasing individual productivity or you can stop the wealth transfer. It will stop sooner or later anyway.

I made some comments elsewhere about the long term. It is delusional to think that it is possible to continually have jobs that pay significantly more than identical jobs elsewhere in the world.

Yes, but the two are related because increasing earned income tax and other taxes to fund non workers on people who do work sap the incentive to work in a manner that increases productivity (either via working more hours or working on hard problems).

Absolutely, definitely those two problems can only be solved together. Although right now I see very little effort going in that direction. If anything social benefits and taxes are increasing.

Germany's progressive tax system also directly incentivizes working fewer hours, as the more you work the smaller your hourly wage becomes.

It's not a surprise that EU countries perform similarly as they have to abide by the same laws and therefore are all restricted in the same ways. For example EU drone regulations prohibit the flying of autonomous drones therefore killing innovation in that area.

It's because post GFC the USA stimulated and the EU went all in on austerity.

It is fairly clear what was the best option.

Under-rated comment. This is basically the whole explanation. 2008 did a huge amount of damage, not just immediately but to long-term mindsets. Ironically I think it's even entrenched the meme that the only real way to make money in the UK is property. We're all Georgists now.

(this includes property as an export industry! Leaving increasing areas of the UK owned by overseas absentee landlords.)

The problem is that people think property is a risk free way of making money - even if they borrow heavily to invest. Maybe what we need is a property price crash.

I'm not sure a property price crash would achieve this goal.

You will have to decide for yourself if I'm speaking from experience or have motivated reasoning, as I'm saying this as an overseas absentee landlord who bought a UK apartment around the tail end of the previous price crash, initially as a place to live in until I decided the UK wasn't for me any more, and was rich enough to do so without a mortgage.

(I left the UK in 2018 due to a mix of Brexit and technological incompetence in the form of the Investigatory Powers Act. Would have left UK sooner but for parent with Alzheimer's).

Reason being: the income from housing doesn't have to come from reselling houses (which a price crash would impact) — I'm collecting rent, not flipping property. Forecasts future increases to rental rates suggests it won't keep getting worse (relative to general inflation) than it already is for renters, but it's already obviously quite bad.

I feel deeply sad having to ask this, but... how did you manage to leave?

In 2018 the UK had not officially completed the process of leaving, so I found a spare room in Berlin, got on a plane and flew, did the initial paperwork for registering with the various things that need to be registered in Germany, and went job hunting.

Just before the actual cut-off date for customs controls, I had the stuff that had been in storage (loft of family house) shipped over.

In the UK it more or less is a risk free way to make money. The government's hand is always seen when a danger to the property market prices hoves into sight.

Nearest we came was ... 2008, with all that implies. I don't think we can have a property price crash until the population starts net-declining.

We could start applying capital gains tax to a primary residence.

>Maybe what we need is a property price crash.

What is needed is a steady decrease in demand or an increase in supply.

The cost of living crisis is directly caused by the huge bureaucracy needed to build new housing. And speculators are benefiting from that. As long as governments are unwilling to let go of regulations housing costs will only increase.

There is no appetite for increasing supply anywhere in the West. Maybe Trump will get us into WWIII and we can shift the demand curve.

>There is no appetite for increasing supply anywhere in the West.

Every single person who currently is looking to rent or buy a house has appetite for increasing market supply.

None of those people have enough political power.

In Germany it is somewhere around 55% of the population.

In the US, it's a lot less than that.

In Germany lifelong renting is seen as a normal and acceptable thing to do, not a temporary stepping stone which will hinder you from achieving your life goals.

No it is not. A house is just totally impossible to finance with the average salary of two people, especially if you have children or a car.

The UK did not choose austerity:

https://commonslibrary.parliament.uk/research-briefings/sn06...

but still has worse growth than the US.

Can you explain how your link supports your argument?

The conservatives ran austerity-based policies for the last 14 years. Is your argument that they did not have a choice?

Have you seen the national debt under the conservatives? It's massively increased.

The UK government did, for all intents and purposes, choose austerity after the pandemic: https://en.m.wikipedia.org/wiki/United_Kingdom_government_au....

They most certainly did

https://en.wikipedia.org/wiki/United_Kingdom_government_aust...

What they didn't do, unlike PIGS, was also tough reforms which are paying back now

https://www.reuters.com/breakingviews/flying-piigs-nations-s...

The Conservative party used austerity rhetoric as a way to win votes, but they did not cut spending other than reversion to the mean after the high spending around 2008.

See here for international comparison of government spending as % of GDP (the second figure showing trends over time), UK is not an outlier:

https://www.imf.org/external/datamapper/exp@FPP/USA/GBR/CZE/...

> Yes we have many comments on HN talking about how harmful the US VCs attitude is because they force good businesses into choosing between being unicorns and not getting funding.

HN has a very wide range of economic opinions, and some people are extremely uninformed about what it takes to do hard things that can't be grown organically, and what it takes to maintain a business running when it's done the hard thing in the face of competition.

Most of the issues here relate to scale and actual quality of the idea/business in the first place. Hard things can really be split into, challenging but a problem to solve, or this never should have become a business. The former will work well with the right sort of investors. The latter will eventually sink, the investors simply provide money and poor ideas such as trying to incorporate AI into every business model.

> Yes we have many comments on HN talking about how harmful the US VCs attitude is because they force good businesses into choosing between being unicorns and not getting funding.

Most of those are people complaining about a business having to make changes because it took $50+m in funding and now needs to justify it. The business was only "good" because it got $50m and didn't need to do things like charge enough money. If it hadn't gotten that $50m then those people wouldn't consider it such a good business or even know about it.

> The UK's economic outcomes have been similar to comparable European economies (like Germany) and better than some (like France)

Who says those countries were well governed though? IMO they are all run by idealogical morons

I agree they were also badly governed - that is my point.