Harsh Truths About The Decline Of Britain

[Sancho Panza]

Telegraph 31/10/13

' It has become something of a cliché that the next generation is the first in history likely to be less well off than its parents. The same thing is said in all periods of prolonged economic pessimism, only to be proved spectacularly wrong. However dark it gets, somehow or other, the march of progress always reasserts itself.

Yet nothing is ever guaranteed, and there may be more reasons for such declinist thinking in Britain today than at any stage in the last century. From the cost of living to standards of health and education, virtually all the measures by which we track economic progress are going sharply into reverse.

Our nation stands on the cusp of potentially catastrophic relative decline, with perhaps one last chance, measured only in years, to turn things around. Growth has returned, but it won’t be sustained without urgent action to arrest myriad failings in our midst.

Exhibit A: living standards. Analysis released by the Office for National Statistics this week shows that disposable income as a whole has risen somewhat since the start of the crisis – but this is entirely accounted for by population growth, lower interest rates and higher employment. Real income per household is going backwards, and is now no higher than it was 10 years ago. Already, this appears to be the longest peacetime hiatus in living standards of the modern age.

Exhibit B: more and more of our income is absorbed by basic essentials. Down the ages, we have had to spend ever less of our time and income keeping body and soul together. This has given us more time for leisure, and more money for discretionary spending, creating a virtuous circle of economic growth.

The ONS analysis shows that we are now going the other way. The amount of our income accounted for by “essentials” – housing, water, sewerage, energy bills and fuel – has risen over a decade from 19.9 per cent to 27.3 per cent. Once food is taken into account, the numbers are more striking still. Cumulative inflation as measured by the Consumer Prices Index – the yardstick used by the Bank of England – has been roughly 30 per cent. Yet the Tullett Prebon Essentials Index – which takes in most of the necessities of modern living – has gone up by more than 60 per cent. Consumers’ discretionary spending has been eroded even more severely than that fall in disposable income suggests.

This inflation seems to be a very British disease. Stripping out the effect of tax rises, the eurozone as a whole is now in deflation, with even energy prices down 1.7 per cent year on year. A deflationary spiral is never something a highly indebted economy like ours would want to get into, but just a smidgen of falling prices would be more than welcome right now.

Exhibit C: education. An international survey by the Organisation for Economic Cooperation and Development has found standards of literacy and numeracy among school-leavers in England and Northern Ireland to be among the lowest in the developed world. Shockingly, older people leaving the workforce were better educated than those joining it. This may be the first time in recorded history that such a phenomenon has occurred, with the young worse educated than their parents.

In identifying the causes, we can safely discount the amount of public money thrown at education, which as a percentage of GDP is roughly in the middle of the OECD pack, and actually higher than some countries that score better. It would also be too easy to blame poor standards of teaching and/or relatively high levels of low-skilled immigration, though these things obviously play a part.

A more fundamental cause is widening levels of social inequality, with their attendant – and growing – deficit in aspiration. Studies from the US show that achievement gaps start to widen as early as 18 months into a child’s life. By three, children of professional parents will have heard 30 million more words than those from low-income homes.

Exhibit D: health. According to a report this week from the World Health Organisation, Britain faces a public health “time bomb”. Obesity, female life expectancy and child mortality rates are among the worst in Europe. Again, the amount spent on public health care – which is roughly average for OECD countries – is not the problem. Much more fundamental is that a poor start to life will significantly impair later health outcomes.

Some of the right things are being done to address these failings – in education and welfare in particular – but they are too slow, and insufficiently bold, to produce a meaningful turnaround. The result is that Britain is living on borrowed time. Yet much of the political debate remains mired in complete or positively harmful irrelevancies – price controls, windfall profit taxes, government support for a feel-good bounce in the housing market, and so on. Sad to say, we still have our heads buried in the sand over the supply-side revolution the UK so desperately needs. '

No mention of the national debt,fiscal/trade deficit or the over leveraged financial sector.

Edited November 1, 2013 by Sancho Panza

[bendy]

Yes but the last generation didn't get to live the manhattan lifestyle of shoebox social living partying it up. They had gardens and things called vegetables and fruits in them, how horrid!

[PopGun]

Yes but the last generation didn't get to live the manhattan lifestyle of shoebox social living partying it up. They had gardens and things called vegetables and fruits in them, how horrid!

Yes and more time at home living and less time at work and $hit. The horror, the horror.

[interestrateripoff]

Easy to fix the education problem move everything to txt speak and the oldies suddenly become stupid and the young are highly educated.

[Wurzel Of Highbridge]

Yes, deflation is a terrible thing

House prices in the country, here still falling.

Petrol prices cheaper than 12 months ago.

Electricity the same as last year.

Food the same price as last year:

• potatoes as down from €12 per sack to €4 due to good weather!
  
• Bought a 5kg frozen turkey for €8 the other week.
  
• Lots of fruit & veg at 3 for €2
  

Traded down the gas guzzler to a 125cc bike @ 130mpg

Rent the same as 18 months ago.

Oh, and wages still rising (slowly) at around 1% to 2%

So this year I am feeling much more wealthy than last.

[crashmonitor]

Five reasons I believe that the generation leaving school now will not be better off than their parents or indeed grandparents.....

(1) University debt

(2) End of final salary schemes

(3) End of welfare in middle age, it will seems absurd that wealthy middle class women were getting the state pension at 60 until 2010 in a few years times whilst they continued with professional jobs. It will be replaced with work til you drop.

(4) Globalised workforce.

(5) Electorate of cougars voting to shaft young people. Help to buy and pension triple locks two example of policies designed to enrich the retired and middle aged.

Edited November 1, 2013 by crashmonitor

[billybong]

Exhibit A: living standards. Analysis released by the Office for National Statistics this week shows that disposable income as a whole has risen somewhat since the start of the crisis – but this is entirely accounted for by population growth, lower interest rates and higher employment. Real income per household is going backwards, and is now no higher than it was 10 years ago. Already, this appears to be the longest peacetime hiatus in living standards of the modern age.

No mention of QE.

The general theme of the article is accurate enough but it could have been written in the 70s.

It's strong on problems but weak on solutions and after NuLabour's wrecking and now the Conservative/LibDem Coalition's extra wrecking with little in the way of inspiration from the likes of the article writer Mr Warner it's seeming like no way out of the decline.

[Craig_]

Yes and more time at home living and less time at work and $hit. The horror, the horror.

Not sure about that. My old man started off at 45 hours per week, only dropping to 40 and latterly to 37.5, whereas I've been fairly consistently employed for 35 hours a week for the last 15 years!

[Greg Bowman]

Five reasons I believe that the generation leaving school now will not be better off than their parents or indeed grandparents.....

Not so sure

(1) University debt - Not everyone has and even now lots of parents helping to minimise so I reckon average nearer £20k, for a decent degree is a pretty good investment

(2) End of final salary schemes - Never been a option for the successful blue collar strivers of Thatchers era (which seem to be the ones with spare cash today)

(3) End of welfare in middle age, it will seems absurd that wealthy middle class women were getting the state pension at 60 until 2010 in a few years times whilst they continued with professional jobs. It will be replaced with work til you drop. See point 2 most people with their own businesses don't think about retirement maybe change yes. The state pension thing was absurd.

(4) Globalised workforce. Find areas that can't be globalised (Got a stake in a car bodyshop for that reason)

(5) Electorate of cougars voting to shaft young people. Help to buy and pension triple locks two example of policies designed to enrich the retired and middle aged - I think you are tarring all us boomers with the same brush, I am 52 and everyone I know of my generation thinks creating a new house bubble is one of the most stupid political acts for years, we actually have kids and believe it or not our generation can live frugally if that sacrifice meant our kids get a reasonably priced home. No one voted for this

We have done well enough and house prices not rising whilst we pay all our debts down is generally the preferred scenario. So we can then easily drop a few bob on our kids for a deposit.

Edited November 1, 2013 by Greg Bowman

[crashmonitor]

We have done well enough and house prices not rising whilst we pay all our debts down is generally the preferred scenario. So we can then easily drop a few bob on our kids for a deposit. [/i]

A Blairtocracy has replace meritocracy.....

http://www.dailymail.co.uk/news/article-2467474/Tony-Blairs-son-Euan-buys-3-6m-6-bedroom-Georgian-townhouse.html

[Bloo Loo]

Yes, deflation is a terrible thing

House prices in the country, here still falling.

Petrol prices cheaper than 12 months ago.

Electricity the same as last year.

Food the same price as last year:

• potatoes as down from €12 per sack to €4 due to good weather!
• Bought a 5kg frozen turkey for €8 the other week.
• Lots of fruit & veg at 3 for €2

Traded down the gas guzzler to a 125cc bike @ 130mpg

Rent the same as 18 months ago.

Oh, and wages still rising (slowly) at around 1% to 2%

So this year I am feeling much more wealthy than last.

THIS....the article ( I read the first line) talks as if the current trend in financialisation is set to continue, against the force of the BUST..Its what all Ponzi participants see as the new normal...until it isnt.

[Greg Bowman]

A Blairtocracy has replace meritocracy.....

http://www.dailymail.co.uk/news/article-2467474/Tony-Blairs-son-Euan-buys-3-6m-6-bedroom-Georgian-townhouse.html

As one of Thatchers B**** children I can't agree more but....His Dad got to be PM there have only been 53 ever. An extraordinary mix of arrogance, fate, guile, charm and ruthlessness

His prize was the ability to do this - not surprising really sort of salmon swimming up stream.

My irritation is with the retired at 55 on gold plated pension mob who were very ordinary individuals and are spunking my taxes and doing some of this.

[PopGun]

Not sure about that. My old man started off at 45 hours per week, only dropping to 40 and latterly to 37.5, whereas I've been fairly consistently employed for 35 hours a week for the last 15 years!

At Work for 37.5, in the pub for the rest

[billybong]

About 8.30 minutes. "Bankers strap on their fracking vests...................."

Edited November 1, 2013 by billybong

[fluffy666]

Some of the right things are being done to address these failings – in education and welfare in particular – but they are too slow, and insufficiently bold, to produce a meaningful turnaround. The result is that Britain is living on borrowed time. Yet much of the political debate remains mired in complete or positively harmful irrelevancies – price controls, windfall profit taxes, government support for a feel-good bounce in the housing market, and so on. Sad to say, we still have our heads buried in the sand over the supply-side revolution the UK so desperately needs. '

No mention of the national debt,fiscal/trade deficit or the over leveraged financial sector.

Someone should also point out that the 'Supply-siders' have been running the show for 34 years now and are STILL whining that they need to go further. Let's see..

* Deregulation of credit, demutualisation, abolition of credit and capital controls -> Huge house price bubbles.

* Selling off Utilities -> Collapse in investment, skyrocketing prices.

* Tax cuts for the rich -> Record deficits.

The fact is, we have a crisis of demand caused by low wages, high unemployment and poor capacity utilization. Supply side measures will make this worse.

[slacker]

No generation can be consistently worse off than the previous in a liberal democracy.

At some point the previous generation gets power and repatriates all the stolen cash to themselves. Just as the boomers plundered when they had power.

Gen X are probably most at risk, many of them gained nothing during the boom but will be caught up in the retribution from Gen Y - so end up with no property, no pension, few free services and no public sympathy.

[byron78]

30 years of trickle down.

Boomer generation bribed into believing in it. Subsequent generations screwed.

[Democorruptcy]

FT article but you can register to view a few a month.

There are Benign or Boom and Bust scenarios

Signs of recovery abound but with little consensus on future course

http://www.ft.com/cms/s/0/72bdab36-4190-11e3-b064-00144feabdc0.html

One about Carney's speech

As of August 2013, loans outstanding to UK residents from banks were £2.4tn (160 per cent of GDP). Manufacturing received 1.4 per cent of the total. UK banking is a highly interconnected machine whose principal activity is leveraging up existing property assets.

http://www.ft.com/cms/s/0/08dea9d4-4002-11e3-8882-00144feabdc0.html

[Saving For a Space Ship]

Yes, deflation is a terrible thing

House prices in the country, here still falling.

Petrol prices cheaper than 12 months ago.

Electricity the same as last year.

Food the same price as last year:

• potatoes as down from €12 per sack to €4 due to good weather!

• Bought a 5kg frozen turkey for €8 the other week.

• Lots of fruit & veg at 3 for €2

Traded down the gas guzzler to a 125cc bike @ 130mpg

Rent the same as 18 months ago.

Oh, and wages still rising (slowly) at around 1% to 2%

So this year I am feeling much more wealthy than last.

as times get harder, you could always double the mpg & increase speed by 40% on the125

http://thekneeslider.com/do-it-yourself-214-mpg-motorcycle-project/

http://www.velomobiel.nl/allert/Recumbent%20motorbike.htm

Edited November 1, 2013 by Saving For a Space Ship

[winkie]

Not so sure

(1) University debt - Not everyone has and even now lots of parents helping to minimise so I reckon average nearer £20k, for a decent degree is a pretty good investment

Few parents can afford to help with their children's education costs, most kids will take the debt on and worry about the extra tax burden later.....if they can get a job that repays it they will be better off than those who can't.

(2) End of final salary schemes - Never been a option for the successful blue collar strivers of Thatchers era (which seem to be the ones with spare cash today)

Not everyone was born in the place at the right time, those days have gone where so many more had so many more opportunitys to improve their lot in life.....not so easy now.

(3) End of welfare in middle age, it will seems absurd that wealthy middle class women were getting the state pension at 60 until 2010 in a few years times whilst they continued with professional jobs. It will be replaced with work til you drop. See point 2 most people with their own businesses don't think about retirement maybe change yes. The state pension thing was absurd.

Starting your own business was once a choice people had, something people admired others for doing, many did very well out of it....now more are being forced to go self employed as there are fewer safe secure jobs with benefits and a regular guaranteed salary at the end of the month.....self employed people rely on people with earned cash, borrowed cash and people with good pensions and a disposable income to thrive....we in effect all rely on each other a chain affect.

(4) Globalised workforce. Find areas that can't be globalised (Got a stake in a car bodyshop for that reason)

But we can still import from the global market place cheap labour, that will work in the car bodyshop.

(5) Electorate of cougars voting to shaft young people. Help to buy and pension triple locks two example of policies designed to enrich the retired and middle aged - I think you are tarring all us boomers with the same brush, I am 52 and everyone I know of my generation thinks creating a new house bubble is one of the most stupid political acts for years, we actually have kids and believe it or not our generation can live frugally if that sacrifice meant our kids get a reasonably priced home. No one voted for this

We have done well enough and house prices not rising whilst we pay all our debts down is generally the preferred scenario. So we can then easily drop a few bob on our kids for a deposit.

Most of us with a pinch of common sense would agree that house prices are way too high and should fall back, they are skewing the economy for our middle earners in a very unhealthy manner, but they are where they are for a reason, to help save/rescue the banks.......paying down personnel debt (killing debt) is the way to go, can be said to better than saving, but the counter balance is without people taking on more debt there will be more underemployment and small retail businesses going under through lack of cash flow......kids not able to save their own deposit and having to ask for help tells us that there is something fundamentally wrong somewhere.

[CrashedOutAndBurned]

The post war period saw reconstruction tied to fast-paced technological development see the growth of the skills working and lower middle class like never before, who bought cars, homes, holidays, and consumer widgets an masse for the very first time. Up until that point the majority of the population usually lived in grinding abject poverty.

It's very optimistic to think that this historic blip could be sustained forever long after the industrial economy that created it has long since been dismantled and sent to emerging nations.

The historical norm is a tiny elite, a slender middle class and poor plebs.

[fluffy666]

The post war period saw reconstruction tied to fast-paced technological development see the growth of the skills working and lower middle class like never before, who bought cars, homes, holidays, and consumer widgets an masse for the very first time. Up until that point the majority of the population usually lived in grinding abject poverty.

It's very optimistic to think that this historic blip could be sustained forever long after the industrial economy that created it has long since been dismantled and sent to emerging nations.

The historical norm is a tiny elite, a slender middle class and poor plebs.

This is true - for most of history we see extreme social stratification, stagnant technology (no resources put into new tech), and the unification of economic and political power.

Societies that manage to break down these things - by luck or accident - invariably turn out far more productive and dynamic than those that don't.

[Dorkins]

The historical norm is a tiny elite, a slender middle class and poor plebs.

If you're going by what has been the most common form of human society since the species began, the historical norm is probably hunter-gatherer tribes with very low economic inequality within each tribe.

[vlad the impaler]

This inflation seems to be a very British disease. Stripping out the effect of tax rises, the eurozone as a whole is now in deflation, with even energy prices down 1.7 per cent year on year. A deflationary spiral is never something a highly indebted economy like ours would want to get into, but just a smidgen of falling prices would be more than welcome right now.

I noticed that there is no mention of the fact we have privatised anything and everything we can. Nothing is sacred, nothing cannot be sold to the highest bidders, The French and German state owned utilities must think it wonderful that they can sit and milk us year after year to enrich their own governments. There is a reason why energy prices are dropping in the Eurozone, and rising by 10% here. We are paying into the rest of Europe through a totally disfunctional and bent 'market' and equally disfunctional and bent regulators. We pioneered nuclear energy. Now we have to pay the f*cking FRENCH to build our power stations at some lunatic rates which we consumers will be forced to pay? No-one cares? No-one mentions this and asks 'WHY'???

The British have had a cancerous tumour of self-serving greedy little b*stard s*itbags running us for too many years for it to be reversable, even if the majority (most of whom would happily do the same if they could) wanted to. How can I profit? What payoff can I expect when I sell another train line/power station/airport/road/prison to the highest bidder? The rest of the world just love our 'world leading' markets (aka we'll sell anything to anyone and then spunk the money down the toilet). Now, everything has been sold - there's nothing left. All the assets are gone, and we will be shafted more and more each year by the foreign govt investers whilst our govt looks on - laughing as they get backhanders to 'be nice'. The majority truly have the leaders we deserve.

[onlyme2]

I noticed that there is no mention of the fact we have privatised anything and everything we can. Nothing is sacred, nothing cannot be sold to the highest bidders, The French and German state owned utilities must think it wonderful that they can sit and milk us year after year to enrich their own governments. There is a reason why energy prices are dropping in the Eurozone, and rising by 10% here. We are paying into the rest of Europe through a totally disfunctional and bent 'market' and equally disfunctional and bent regulators. We pioneered nuclear energy. Now we have to pay the f*cking FRENCH to build our power stations at some lunatic rates which we consumers will be forced to pay? No-one cares? No-one mentions this and asks 'WHY'???

The British have had a cancerous tumour of self-serving greedy little b*stard s*itbags running us for too many years for it to be reversable, even if the majority (most of whom would happily do the same if they could) wanted to. How can I profit? What payoff can I expect when I sell another train line/power station/airport/road/prison to the highest bidder? The rest of the world just love our 'world leading' markets (aka we'll sell anything to anyone and then spunk the money down the toilet). Now, everything has been sold - there's nothing left. All the assets are gone, and we will be shafted more and more each year by the foreign govt investers whilst our govt looks on - laughing as they get backhanders to 'be nice'. The majority truly have the leaders we deserve.

Indeed.......

http://www.mirror.co.uk/money/city-news/liberum-capital-brokers-say-hinkley-2658012

Government's £1billion Hinkley Point nuclear power station deal is branded 'INSANE' by experts

30 Oct 2013 20:03

Analysts say they are 'flabbergasted' by the the cost of the contract with French firm EDF and Chinese investors

,,,

But brokers Liberum Capital said the deal would make Hinkley the most expensive power station in the world, with rich rewards for its investors.

It claimed they could rake in £1billion a year in profit from the plant, compared to the £2.1billion a year the Big Six energy companies currently make from their generation arms.