It is seldom that a great empire is destroyed by a single blow but the operation of so many causes said Edward Gibbon, The Decline and Fall of the Roman Empire Never was that latter description more appropriate than for the UK of today. The sun-never-set empire is now mired in an economic slowdown that has relegated it to last place among the G7 nations for growth. It’s been revealed to be too weak to withstand the shock of Brexit, the ravages of the Covid-19 pandemic and the Ukraine-Russia war while confronting deep structural weaknesses like public debt that is soaring out of control and stubborn inflation, an industrial sector that has ground to a halt and a growing skills shortage. Politicians know that without bold reform the UK will sink ever deeper into economy torpor and recession lose its competitiveness on the world stage.
So one may ask, then, why a country which was once on top now stands at the bottom of the economic performance index between all G7 nations?
They include: Soaring public debt and bonds yield crisis, unemployment, high cost of living, a stagnant production sector, an aging population, inaccurate government’s policies, US imposed high tariffs on the UK, pension fund crisis ,a widening skills gap imbalance in efforts to reform macroeconomic and microeconomic policy flaws in monetary policy, unreformed labour market, over-dependence on debts, regressive taxation, low export opportunities, inefficient industrial sector problems with import substitution among others are some of major challenge the UK government will have to conquer.
Nevertheless, even with the full picture of these challenges, the government is struggling to turn around the economy. So Economists And other experts had said that: some solutions were there on how a country could improve outlook towards growth and stabilization of the economy but till now the country has not achieved the desired results in terms of growth right?
Real GDP grew 0.7% in Q1, 2025, and Office for Budget Responsibility predicted a 1% growth rate in FY25. The Consumer Price Index was at 3.4% in May, with core inflation of 3.5% the highest among G7 nations. Bond yields in the UK market have undergone the bend in shape with current yields at 30 years high which has not been seen since 1988. Health care and pensions still take a big piece of the budget as it already is, as well as an ever-increasing amount on Personal Independence Payments.
The public debt to GDP of UK is forecasted to be around 104% of GDP by end-2026 with respect to the current trajectory of the policy by the OECD (Organisation for Economic Co-operation and Development), and at the same time, the fiscal deficit may gradually decline from over 6.0% of GDP in 2024 to around 5.3% in 2025. This shows that the debt burden is still one of the maximum in the developed world and the costs of servicing are eaten away into fiscal space. UK interest rates are some of the highest in the OECD, so government is under some pressure to ensure it comes up with sustainable solutions.
UK’s household debt is increasing and nearly three in four adults report that their monthly cost-of-living expenses have risen in the past year, pushing them toward reliance on credit and debt to cover necessities. The Debt component of the program will need to be recalibrated from liquor store juggling sheets towards duration targets longer than 10 years; in essence locking in rates at the same time as we are reducing refinancing risks. All that newly freed up capacity; leasing orphaned public assets for short-term cash and generating one-time revenues without changing ongoing service delivery focused investment all while driving productivity (R&D,Green/VentureTech /public private partnerships, screamed aloud with generous –albeit temporary tax inducements to drive innovation! Establish high-level apprenticeship scheme and T-levels that are fit-for-purpose (and in harmony) with industry, to address the widening skills gap in manufacturing and technology.In particular, exports diversified must be at the forefront.
There will be new trade deals with rapidly expanding sectors, which will offer opportunities all around the world for UK businesses through trade finance guarantees, improved logistics that support to deliver exports. The bank of England must also keep itself divorced and set interest rates on nothing but an economic data diet to keep inflation down. Taken as a whole, then, these actions would complement fiscal consolidation to revive the production sector and stockpile the UK to regain its competitive standing among the G7 economies. We have to understand that the difficulty lies not so much in developing new ideas as in escaping from old ones.
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