On Friday the inevitable happened: the UK lost its AAA rating, making the cost of borrowing for the country a whole lot more expensive. This has been on the cards for some time, as George Osborne’s austerity measures have failed to meet his own targets and making a mockery of the coalition-led government’s insistence that drastic cuts to social provision was necessary to bring down the deficit.
Both the U.S. and France have in recent months lost their triple ‘A’ rating too, and while some commentators have said that this does not necessarily give cause for alarm, it does show to some degree that the most powerful economies are still ailing.
General predictions from economic experts suggest that it might be 2015 before real growth is seen in the UK and other western European economies, yet what seems more likely is that the economic turmoil of 2008 was a watershed for the prosperity of the wealthiest nations.
Spain, Italy and Greece are gripped by economic crisis and political mismanagement and the gap between the haves and have-nots has grown steadily since the economic crisis, as the wealthy have seized upon the opportunity to further increase their wealthy through the improverishment of others. It seems unlikely that these economies will ever fully recover from their current woes, when they are so heavily reliant on their neighbouring trade partners, who are also struggling.
In the UK, there seems little to suggest that the economy will be able to get back to the level of growth seen in the boom years. Primarily because the boom years were an illusion of prosperity based on a credit bubble which brought about the current malaise. Wages have been stagnating for a decade, with property, giant flat screen televisions and holidays funded by banks and financial institutions willing to offer cheap loans with very few questions asked.
And what has the UK to offer the rest of the world in terms of trade? What does the country produce that will kick-start the economy? The answer, as most now know – is very little. Manufacturing is in decline – in 1970 it accounted for about 30% of GDP and in 2012 it is 12% – while the service industry is booming. Unfortunately for many workers, this means part-time hours, little or no job security, no employment rights and little opportunity for career progression.
What the nation is doing well at – educational products and services and the financial sector, bring with them their own set of problems.
A huge increase in tuition fees has made a university education unattainable but for the most well-off students, and with such huge fees students are now opting for subjects that have a higher chance of guaranteeing a prosperous job after graduation – leaving Arts and Humanities subjects to rot. This obviously causes it’s own problems, creating future generations of Business Studies grads and Accountants and fewer people with the analytical and critical skills taught by Arts disciplines.
Some Higher Education institutions are degrading the quality of their courses by taking (and passing) international students who lack both the language and critical skills to sufficiently cope with undergraduate courses (and before I get accused of lazy racism here, it is a field I’ve worked in for over a decade) – universities are taking non-EU students over domestic students purely because the amount they can charge is considerably higher. In effect, they are degrading the reputation and standing of Academia to make a quick buck. The stock of British education will surely suffer.
The Finance sector almost single-handedly got us into the mess that we see today. The banks held a gun to the heads of British taxpayers by threatening to plunge the country, continent and possibly most of the world into an apocalyptic depression unless public funds were handed over in order to pay for the mistakes that it had created – while paying itself hundreds of millions in bonuses. These threats are still made implicitly even now – with the City and its big-hitters threatening to take their business elsewhere if the super-rich are taxed 50p in the pound, or if any government were to agree to Tobin’s ‘Robin Hood’ tax.
An economy that places so many of its eggs in one basket is surely tempting fate. The banking sector has ripped the heart of of society by conspiring with an arrogant government to deny the lowest in society a safety net that began over a century ago.
In the next part I will detail how corruption, media control and diminishing resources are all pointers that current situation points to long-term national decline.