Its economy is worth roughly 508 billion pounds, which equals 652 billion dollars.

If it were an independent state, London would rank as the 22nd largest economy in the world, precisely above Argentina and Sweden.

However, London's prosperity and that of South East England is atypical for the country.

This small area makes up nearly half the UK's GDP while having about a third of its population.

If one were to amputate London's output, it would reduce British living standards by 14%, just enough to slip ahead of the US state of Mississippi.

Yeah, the UK has seen better days.

The last 10 years have been particularly tough.

Real disposable income, which is income after taxes and benefits, has remained almost unchanged.

The cost of goods and services has gone up.

Compared to a decade ago, people can buy less with their income.

Meanwhile, productivity is low, one of the lowest of any major economy and housing has become nearly unaffordable, with the UK holding the record for the highest number of homeless people in the developed world.

The cause for these issues is rooted in past political decisions.

Britain has slumbered and stumbled its way through a number of setbacks.

Now, the crisis has become endemic with no quick fix in sight.

When you think about it, it's ironic.

The UK was the first country to industrialize.

Now, it stands to become the first to de-industrialize.

Seen from a larger angle, Britain's economy is on a downward trajectory.

Prices are rising too fast.

Just recently, housing prices rose by more than £2,200 in a month.

Unfortunately, this wasn't widely reported in the media.

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Not long ago, Britain was considered one of the world's most prosperous nations and a world of skilled professionals seeking to advance their careers.

Today, not so much.

The state is under incredible socioeconomic strain, more so than people realize.

Three back-to-back geopolitical shockwaves have left it with a colossal debt.

Brexit, COVID, and the Ukraine war.

The catalyst, however, dates to 2008, when the financial crisis introduced long-lasting effects.

Like everyone else, Britain was deeply injured, but the way it handled the fallout set it apart from the rest of the developed world.

After borrowing roughly 141 billion pounds to bail out British banks, the government opted for austerity measures instead of investing in fiscal and social policies.

There were no significant tax cuts or minimum wage increases.

There was no inflation control, no housing assistance, no job creation programs.

You get the point.

For ordinary citizens, the consequences were devastating.

Real household income dropped and then flatlined for the next 15 years.

In economic terms, this is known as a lost decade.

For added perspective, in 2007, the average British household was 8% less prosperous than those in Norway and just 6% behind those in the United States.

In the years following, the deficit grew substantially.

Today, British households sit 20% behind Norway and 16% behind the US in terms of real income.

This drop in living standards is felt vividly among the middle class.

Real household income is a fundamental driver of economic activity.

It encourages consumer spending and improves living standards, all of which contribute to economic growth.

In Britain, however, the government prioritized corporate interests above all else.

But even here, in the corporate world, the gains were mostly short term.

The productivity rate was left on the back burner and no significant investments were made in this domain.

For context, increasing productivity is one of the most efficient ways to grow an economy.

But contrary to popular belief, improving productivity does not mean working harder.

Instead, the point is to boost economic output without increasing the amount of work.

So when an agriculture-driven economy switches to manufacturing microchips, productivity increases because the tech industry is more profitable and has greater margins.

Ergo, the workforce is getting more out of it for the same amount of labor.

That's why Japan is turning farmland into factories.

It adds to productivity and ultimately improves the economy.

In the UK, productivity output per capita debilitated after the 2008 crisis due to a This chart by the London School of Economics puts things into perspective.

Before the crisis, productivity was growing at nearly 2% annually.

After the crisis, however, it weakened substantially, changing a trend that had been in motion since the 1980s.

The British workforce now has the second lowest productivity rate among the G7 economies, whereas before the 2008 crisis, it was second only to the US.

The simultaneous effects of sluggish real household income and low productivity explain a lot about the performance of the British economy.

It is essentially fighting for its life.

Britain's lost decade happened so casually, so indifferently, that none of its political parties acknowledged it, let alone addressed it.

There was no political discourse on this subject that was affecting millions of households.

But it was a crisis nonetheless, and so the discourse expressed itself in the form of Brexit.

However, the uncertainty over Brexit made a bad situation even worse.

It had a particularly sharp effect on direct foreign investment.

According to the Bank of England, Brexit reduced investment by 25%, measured from 2016 to 2021.

What's more, soon after Brexit, the onset of COVID exacerbated the economic crisis that was brewing underneath.

The government stepped in and borrowed an additional 280 billion pounds in its response to the coronavirus.

This was deemed necessary to get the nation through the pandemic.

But here's the thing, most of the COVID bailout was borrowed when interest rates were at historic lows, sitting around 0.1%.

At the time, repayments were expected to be relatively manageable, and this might have been true were it not for the final nail in the coffin, the Ukraine war.

The minute the Russians began their full-scale assault, access to Russian oil and gas was halted by sanctions and trade restrictions.

At the same time, an energy crisis started brewing, and the cost of living jumped across Europe.

The crisis hit close to home.

British households were projected to pay three times the previous price just to heat their homes during the winter.

Much of the public was anxious, so the British government intervened again.

This time, it was one of Europe's most generous in financial support.

Between 60 billion and 100 billion pounds in additional spending went straight into Britain's debt.

The damage to households was mild, but the bailout gave the UK its biggest increase in debt as a share of its GDP.

The synthesized pandemic crisis and energy crisis pushed inflation rates to new highs.

In response, central banks ramped up the interest rate.

For ordinary citizens, this meant that mortgage payments went up overnight by hundreds of pounds.

Meanwhile, for the government, the high interest rate added additional billions to the national debt.

While before, debt repayments were believed to be relatively manageable, after the energy crisis, debt became increasingly expensive to pay off.

Servicing debt jumped from 40 billion pounds per year to about 100 billion pounds per year.

That is a staggering 60 billion pound increase in spending, which is nearly the entire British defense budget.

So yeah, although admirably, Britain's support to Ukraine essentially broke its economy.

Britain's debt interest bill is now the country's second largest item of spending.

The surge in debt has reduced available funds by tens of billions of pounds, limiting spending on other items.

Nearly all the country's public services are affected by it, which then depreciates the quality public services can provide.

At its core, economics is about more than markets and money alone.

It is about understanding the choices people make and how demographics drive those decisions.

Economics is essentially the study of people, not just numbers.

After the COVID lockdown subsided and life returned to normal, every advanced economy witnessed a surge in the workforce.

People found jobs and moved on with their lives.

This chart shows the change in economic activity among the G7 nations between 2019 and 2023.

Britain stands out.

Its workforce never recovered.

It just stayed low.

A smaller workforce has all sorts of ripple effects.

It means less taxes to pay for services like healthcare and greater expenditures on social benefits.

It also means people have less money to spend, which hurts businesses and affects the number of jobs available in an economy.

So the consequences go full circle.

But Britain's workforce problem goes much deeper than the missing 1%.

Officially, unemployment in Britain is low by historical standards, sitting at 4.4%, which amounts to 1.5 million people.

But reality paints a different picture.

Britain's workforce is missing a staggering 11 million people.

The government doesn't consider it unemployment though, calling it economically inactive instead.

The reasoning is that this group, amounting to 9.4 million people, is technically not looking for work or is available to start a job.

The Office for National Statistics explains the motives.

About 2.1 million, aged between 16 and 24, are students and thus economically inactive.

About 3.5 million of those over 50 years old are out of the workforce due to sickness and early retirement.

Meanwhile, at least 1 million people, aged between 25 and 49 years, do not work because of caring responsibilities.

A workforce missing 11 million people is no small matter.

But businesses need to keep running regardless.

This puts tremendous pressure on the government and one way to offset the difference is by opening the borders.

So British lawmakers did just that.

More people from outside the UK immigrated to the country to work with South Asia and Sub-Saharan Africa standing out.

These migrant workers fill the gaps left by a reduced workforce.

But simultaneously, the rapid and large-scale influx of immigrants has raised social tensions within the nation.

People feel threatened by the changing ethnic demographics and some lawmakers exploit such moods to score political goals.

In early August 2024, anti-immigration protests and riots rocked Britain, affecting over 20 towns.

While the riots have peaked, addressing the origins will take much longer to fix.

In its entirety, Britain's economic chronicle, marked by a continuous decline, illustrates how one crisis triggers another and yet another and ultimately leads to a chain of events from which there is no immediate relief.

This is the bed that was made and now people must sleep in it.

On the plus side, every nation goes through ups and downs and the UK is no exception.

London is still one of the wealthiest and most innovative cities on the planet.

Eventually, things will get better but until then, Britain will function like a third world economy attached to London.

I've been your host Sirvan from Caspian Report.

If you approve of what we do, please leave a comment, hit the like button and mayhaps share the video.

In any case, thank you for your time and so long.