Little Britain: why the UK is no longer a superpower



"Economic crisis apart, the United Kingdom is still a major player on
the world stage, right? Wrong"

"The heart of the Square Mile in London looks the same as it did 100
years ago....... It is no longer the hub of the City, let alone the
beating heart of the most powerful nation on Earth."

"London remains one of the globe's three financial centres.... But the
City's centre of gravity has moved several miles east to Canary
Wharf.... where most of the investment banks now have their European
homes..... Only a few of the biggest financial institutions are now
British-owned, the so-called Wimbledon effect, where London hosts the
world's best but lacks domestic champions of its own."

"It has been three-quarters of a century since Fred Perry was the last
Briton to capture the men's singles title.... in the era when sterling
could seriously be considered the world's premier reserve currency.
Some would say the pound never recovered from the first world war.
From the moment the UK finally came off the gold standard in 1931, the
story has been one of devaluations of the currency once in every
generation in an attempt to price uncompetitive exports back into
global markets: officially in 1949, 1967 and 1992; as a result of
market forces in 1976, and again in 2007, when the onset of the global
financial crisis saw the pound depreciate by 30%."

"The cotton and woollen mills are long gone, as are many of the
companies in the electronics and motor vehicle sectors that flourished
briefly in the 1930s and again after the second world war. The decline
of British manufacturing is symbolised by the fate of Longbridge in
Birmingham. At the end of the 1960s, it was the largest car plant in
the world, employing 250,000 people, but after the collapse of MG
Rover in 2005, most of the site was sold off for commercial and
residential use. There are still a few car workers at Longbridge, but
they are employed by the Shanghai Automotive Industry Corporation. The
old Morris plant at Cowley, on the outskirts of Oxford, has survived
and is still churning out the Minis that, along with Mary Quant
dresses and the Beatles, were the symbols of the swinging 60s. The
plant, though, is owned by BMW of Bavaria. It is a similar story for
Jaguar and Land Rover, run by the Indian company Tata."

"Gone, too, is the oil that briefly, in the 1970s and 1980s, offered
the promise of a windfall to finance industrial regeneration...Oil and
gas are imported from Russia and the Middle East, nuclear power
stations are coming to the end of their lives and Britain has only a
handful of working coalmines. The words used by Sir Edward Grey in
1914 now have a more literal meaning: the lights are about to go out."

"In the hundred years from 1914 to 2014, the century since the
outbreak of the first world war, the UK will have declined from
pre-eminent global superpower to developing country, or 'emerging
market'. The symptoms of this vertiginous plunge in the world's
rankings are already starkly apparent: a chronic balance of payments
deficit, a looming shortage of energy and food, a dysfunctional labour
market, volatility in economic growth and a painful vulnerability to
external events."

"Since the start of the crisis, the UK has borrowed more in seven
years than in all its previous history. It has impoverished savers by
pegging the bank rate well below the level of inflation, and indulged
in the sort of money-creation policies normally associated with
Germany in 1923, Latin American banana republics in the 1970s and,
more latterly, Robert Mugabe's Zimbabwe."

"Then there is the large number of unproductive workers engaged in
supervisory or 'security' roles, on the streets, in public parks, on
the railways and at airports. There are the wars fought without the
proper resources to do so...... There is the ramshackle infrastructure
existing in parallel with procurement contracts that run billions of
pounds over budget and are then cancelled."

"If these are the big indicators of imminent relegation, the smaller
ones are too numerous fully to catalogue. Thus the UK government has
unveiled a 'tourism strategy', in the manner beloved of developing
countries the world over, and the annual allocation of places at state
schools has disclosed such an enormous shortage that the authorities
have resorted to lotteries and other forms of rationing, rather like
the 'rolling blackouts' seen in post-colonial countries that have
allowed their power stations to decay."

"This summer will be the third time that the Olympic Games has been
held in London. On the first occasion, in 1908, the UK was the world's
superpower. On the second, in 1948, the UK was the one country in
western Europe not completely devastated by six years of total war,
but it came a poor third to the US and the Soviet Union in
geopolitical influence. By 2012, the UK has joined the ranks of the
nations that see the Games as a way of showcasing themselves or of
getting the taxpayer to fund extravagant regeneration schemes that
would not have been seen as financially viable in other
circumstances."

"A developing economy - or strictly, in the case of the UK, a
de-developing economy - exhibits certain features. It cannot find work
for all its young people, and contains a large number of unemployed
graduates, traditionally a major source of social tension. Despite
this, it imports workers from abroad to fill the gaps left by its own
dysfunctional education system, and it supplies beer money, in the
form of cash benefits, to its hard-to-employ native workers. Its
economic policies lack clarity: on tax, on inflation, on public
expenditure. It is particularly vulnerable to price movements in major
world commodities. Above all, and perhaps in summary of these
symptoms, it is weak, dependent on outsiders for finance, skilled
workers and energy supplies."

"The UK accounts for just 3% of the goods exported globally, down from
4.4% at the turn of the millennium, and is a net importer of
industrial products, food and energy. Put simply, it used to be a
great manufacturing nation but is one no longer."

"Most work is in low-skill jobs, with large dollops of public spending
used to create for graduates white-collar jobs that would, in previous
eras, have been held down by school leavers. This process is going to
continue; by 2040, and perhaps sooner, the UK will have dropped out of
the list of the 10 biggest economies in the world."

".....One hundred years of pretending to be a "big beast" have to end
now. There has to be an acceptance, like that in Germany, France and
Japan in 1945, that the country has hit rock bottom and needs to
change... This has never happened to the UK, and even now the country
does not seem ready for the sort of cathartic moment that the defeated
Axis powers had at the end of the second world war. Even now there is
a belief that all will be well, that something will turn up, that
Britain will muddle through. The temptation, as ever, will be to look
at the events of the past decade as another occasion where disaster
was averted by a whisker. The reality is different: this is the moment
when the UK has to face the truth about its diminished status in the
world."

"Extracted from Going South: Why Britain Will Have A Third World
Economy By 2014, by Larry Elliott and Dan Atkinson, published by
Palgrave Macmillan on 14 June at £14.99. To order a copy for £11.99,
with free UK p&p, visit the Guardian Bookshop."
http://www.guardian.co.uk/business/2012/jun/08/why-uk-no-longer-superpower

Seems like Larry and Dan have been listening to many of my comments on
the subject!

MM
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