David Craig, on October 4th, 2023Wednesday/Thursday blog
One of the big news stories last week was that a revision of Britain’s GDP (Gross Domestic Product) figures by the ONS (Office for National Statistics) showed that the UK economy grew faster than previously thought. Apparently our economic growth even even surpassed growth in some other major European economies. The Times reported: ‘UK GDP: Economy grew faster than Germany and France after Covid‘, Sky News announced: ‘GDP: UK overtakes France and Germany as economic growth bigger than expected after COVID’ and even the Guardian admitted: ‘UK economy makes stronger recovery from pandemic than first thought: Revisions to figures show stronger performance than Germany and France’.
As I’m sure most readers know, when the mainstream media is in agreement about a story, it’s advisable to check what is really happening. To keep this simple, I’ll just compare the supposedly growing UK economy with supposedly recession-hit Germany. UK GDP is around $3.16 trillion while Germany’s GDP is about $4.31 trillion. However, with a population of about 67 million, Britain has a smaller population than Germany with 83 million. So a better comparison of the two countries’ economic performance is GDP per Capita. For the UK this is $46,310 while for Germany it’s $51,380 – about 11% higher than the UK. Moreover, Germany’s government debt is 59.8% of GDP, UK government debt is a much more impressive 100.5% of GDP.
But to see what is really happening in these two countries, we need to drop down further to look at a key driver of economic performance – the percentage of each country’s GDP made up by manufacturing. Manufacturing is of course making products that people in your country and abroad want to buy. So manufacturing represents the creation of real wealth. Since 1990, the percentage of UK GDP from manufacturing has halved from around 16% to about 8%. Since 1990, this has also fallen in Germany from 25% to 18%. So, despite the pundits telling us last week that Britain was outperforming Germany, with its much lower government debt and its much larger manufacturing sector the actual figures suggest that Germany has a much stronger economic base than Britain.
However, we can do another short fun exercise to better understand how solid or ephemeral Britain’s supposed economic growth is. We know that Britain is paying at least £8 million a day to house illegal migrants in 3- and 4-star hotels with three meals a day and decent wifi as any lesser accommodation would apparently be an egregious breach of their human rights. That £8 million a day amounts to around £2.92 billion a year. We don’t have this money as our government spends much more each year on all sorts of useful things – education, health, defence, critical race training for all civil servants and hundreds of DIE (Diversity, Inclusion and Equality) managers in our collapsing NHS – than it collects in tax. So the government has to borrow this £2.92 billion. Britain’s GDP in pounds is £2.27 trillion. This means we are increasing our GDP each year by more than one percentage point just through borrowing money to house, feed and entertain illegal migrants. With the UK economy projected to grow by just 0.3% in 2023, one might conclude that, were we not adding over one percent to our GDP by borrowing £2.9 billion to welcome illegal migrants, the UK economy would actually be in recession.
In the last financial year, the British government borrowed and spent (wasted?) around £122 billion. This is equivalent to more than 5% of our GDP. So, had the government not borrowed this money to pay for stuff like 5 million people sitting at home claiming they’re too ill to work, an extra 26,150 civil servants hired in just the last year, billions in foreign aid to the world’s most corrupt countries and other such stuff, our GDP would be more than 5% smaller than official figures suggest.
In a recent equally cheerful article for The Daily Sceptic – Britain is Leading the world in Committing Economic Suicide – I quoted Economist Richard Salsman: “The science of economics is clear: the production of money and debt is not equivalent to the production of real wealth. To claim otherwise is to follow fantasy, not reality – or science.”
https://dailysceptic.org/2023/09/29/britain-is-leading-the-world-in-committing-economic-suicide/
My worry is that Britain is in an economic doom loop. As we move away from cheap reliable fossil fuels – coal, oil and gas – to expensive, unreliable and intermittent energy sources like wind and solar in pursuit of the net zero paradise our politicians and mainstream media so desperately crave, we now have some of the most expensive energy prices in the world – over twice the price in France and the USA and four times the price in China and India. This is causing companies to off-shore their operations crippling what little is left of British industry. With our economy unable to produce sufficient wealth to support the welfare state, the government is forced to borrow, print and spend ever more money. This extra spending may give the impression that our GDP is growing, but as Richard Salsman so lucidly explains: ‘The science of economics is clear: the production of money and debt is not equivalent to the production of real wealth’.
We are living off borrowed money. But we are also living on borrowed time. At some point, we will have borrowed so much that either increasing interest payments will ruin us and/or nobody will be willing to lend us any more money. Hopefully this collapse will happen when Sir Kneeler Starmer’s bunch of fools and knaves is in power. Then it will be interesting to see how our political rulers extricate the country from the coming economic catastrophe for which their policies are responsible.
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Not sure Germany is a good comparison as their industrial base is rapidly decamping to either US or Asia because they naughtily carried on using cheap Russian gas. This despite big brother USA telling them they had to use expensive US LNG instead so now they are on the global naughty step. They were busy anyway running towards the same cliff the UK is so keen to jump off – we are just jostling for who will be first or global leader as Boris and his fellow clowns call it.
Net zero is a disaster and will kill the economy unless we magically produce trillions to build hundreds of nuclear power stations. But lets face it that wont happen so yes agree with the second part of this article and we are facing a very cold and poor future. A US lapdog like Japan being obedient and obeying their crazy clowns or we get thrown into the cold like Germany.
Sadly our government and state sees no other way than being a lapdog for the US empire or rejoining the EU empire. We are to suffer managed decline and the very real possibility of slashing the size of the state and becoming singapore on thames is very much not to be considered as it would be so vulgar and too nasty although it may just be worth trying given the inevitable failure of clown world.
I used Germany as a comparison because that’s the country the three newspapers I quoted used.
I’m not sure what the GDP tells us. If the government is using it, then probably not much. What happened to the concern about the balance of trade which Wilson was always concerned about. Sunak constantly talks about wanting growth, but growth of what? If he did the same as Ireland and reduced corporation tax then the money should flow in.
I suspect we are looking at past mistakes that relate to bailing out failed industries and especially the banks, not to mention the nationalisation programme after the war. Germany did the opposite and modernised its industry, we nationalised and created a welfare state. Now we are reaping what we sowed.
The GDP/capita is another pointless average in my view, just like the earth’s temperature. Compare the GDP/capita to the average income which I think is about $35,000. There is a $16,000 difference. What these averages hide is the vast difference in income and living standards between the richest and poorest. They also hide the welfare state which means living off other people’s efforts. You mention the money spent on migrants. They are supposed to receive the same treatment as the indigenous population, so why not give them a blanket and a begging bowl.
I’m not convinced that manufacturing is creating wealth for the majority. All I see is mass consumption that is transferring wealth from the poor to the rich. How do we benefit from planned obsolesce resulting in unreliable products that cannot be repaired and also the constant advertising encouraging us to believe we must have the latest versions? We just pay several times over for essentially the same product. As well as wealth transfers I have the view that there are too many people and not enough jobs due to automation. As a result we have a lot of pointless jobs that mainly in data collection, monitoring and report writing, all designed to control our behaviour.
But we have our mass entertainment, foreign holidays, toys to distract us from the real intentions of every western government and the big corporations and investment companies, which is to create a one world government where we will all have nothing. A majority go along with everything because as long as they have a reasonable life, which is true for most people in the west, they don’t want to think about what is going on and they have been educated to trust in the government. They never got past taking the stabilisers off their bikes.