I think the most instructive comparison point for the UK is France, both in where neither country is doing especially well, and what the UK more specifically is bungling. They're similar-ish sized countries in population, both in western Europe, and both advanced services-oriented economies. Also, neither has exactly had scorching-hot economic growth in the 2020s. I think this points to a general problem medium-sized countries suffer from in our current global economic system, where globalisation is stagnating and the big industries of the future, especially AI, are really capital-intensive. The US overcomes this, and dominates, by being big, an option neither France nor the UK have unless the EU fundamentally changes.
However, there is also clearly a UK-specific problem, one that becomes obvious when you look at the two countries side-by-side as Noah points out. I've lived in France for close to four years in various parts of the country after spending about a decade in England, mostly in the southeast. The standout differences are the French state's ability to lift and shift, and how many fewer options NIMBYs have here.
Because of that, the housing and infrastructure situations in both countries are night-and-day. I now live in an energy-efficient new build in one of the most desirable parts of France. It took some time to get it built, but the local and national governments had the tools to overcome opposition to it. The same would be almost inconceivable in the UK. Similarly, I can get excellent mobile signal in empty farmland in France, but will struggle almost anywhere in England that isn't London.
I think this, and of course the country's famous high-speed rail network, really improve both labour mobility and economic opportunity in cities outside of Paris. The result is not only a stronger economy but one where secondary cities are noticeably more productive than is the case in the UK.
No worker commutes by high speed rail except plutocrats. It is a substitute for a plane ticket, not a commuter trip:
French industry is decentralized and is export- oriented. This and high levels of public sector employment keep the regions afloat, along with decent pensions.
Of course, France has US style debt and deficits and the UK does not…yet. France grows slower than the US, its industries are vulnerable to Chinese competition (US already hollowed out) and survive in part on protectionism (who buys a Peugeot rather than a Japanese or Korean car), and its tax rates are already high .
French youth are often on temp or contract jobs and dream of the factory or government jobs their parents had.
Is quality of life good in France- yes, if you have money and agree better than UK if you do not, but also unsustainable
Noah's slam on the UK for developing "expensive off-shore" wind energy is misguided. This is a rapidly deployed strategy to exploit massive new generation for the UK, with minimal NIMBY opposition. France, in contrast, already has a surplus of expensive 24/7 nuclear generation. Their problem is that during intense heat waves, they have to curtail nuclear because the reactor cooling water gets too hot to release into the rivers. That's why France, and South Korea, have both mandated construction of widely distributed solar canopy parking lot Virtual Power Plants at ALL existing parking lots over 80 spaces, nationwide, within 3 to 5 years, largest lots first. Parking lot owners get new income from 25-year airspace leases on their hot asphalt lots. Small business and residential utility rate payers get readily available, cheap Level-2 EV charging everywhere, AND reduced and stabilized utility rates due to a rapid reduction in peak utility transmission demand during afternoon and evening hours and intense heat waves and cold snaps.
Before you write off the UK and EU for under-performance, consider that a new Pew Research Center report on global renewable electricity generation shows that's the only place where renewable electricity generation (not including nuclear) has already significantly surpassed fossil fuel generation: 48% vs 29%. No other countries are even close, including China and the US. And the UK and EU don't enjoy the abundant, low-cost solar resources of many other nations.
Whether or not offshore wind is the best renewable the UK can implement, it is clearly more expensive than onshore wind or solar. That expense is simply the result of building custom towers for each and every turbine rather than getting prebuilt components.
I agree that offshore turbines produce more expensive energy than onshore wind & solar, but floating turbines are much, much larger, and they are assembled from pre-fabricated parts in port, and then towed out to offshore locations by tugboats, where they're anchored with large chains to pre-fabricated, sunk ballasts. Units that require significant repair or pre-scheduled servicing are towed back to port. it's a massive industrial operation that obviously requires significant scale to be efficient,.... just like offshore oil & gas rigs. But nobody's out at sea on platforms drilling new wells, and power cables to shore require less maintenance than fossil fuel pipelines.
Offshore wind is a massive resource that will only reach it's maximum efficiency when it scales large enough to capture it's surplus to produce storable & transportable ammonia and synthetic jet fuel with electrolysis. Probably by 2040, but could be sooner. This is why US BigOil&Gas has tasked Trump to freeze European offshore wind developers out of US territorial waters as long as possible.
I live next to the Polish border and I visit Poland often. I am also the sort of person who likes to talk to strangers, like cashiers in a Zabka store.
You can often tell that someone worked in the UK by the fact that they have something UK-related on them or near them. A small pin with the Union Jack, or a scarf, or a picture of London next to their cash registry. They obviously liked Old Blighty.
But they also all agree that the old recipe "go to England for work and make some money" stopped working and that the overall balance of wages, cost of living, safety etc. is now better back home in Poland.
Your analysis hits on many crucial points, Noah, but it misdiagnoses Brexit as an exogenous shock that triggered Britain's decline, when it was actually a symptom of it. Treating Brexit as the primary cause ignores the deeper story: decades of severe regional inequality, chronic underinvestment outside London, and damaging austerity created a disenfranchised electorate looking for a wrecking ball. Brexit didn't invent the UK's structural stagnation—it was the desperate political backlash against 30 years of being left behind. It certainly accelerated the crisis, but it didn't create it.
Probably like all the other large mature Western European economies still in the EU (Germany, France, Italy). Which is to say, not great. EU membership has very real benefits (and also downsides) but is no panacea
EU membership at least offers the prospect of belonging to a larger and more thoroughly integrated economic block. The EU may have a lot of work to do, but integration is the only way towards a viable economic structure for these smaller countries.
UK’ post GFC recovery was remarkable (given its financial sector) as was its fiscal restraint. Sure it needed to raise taxes 5-10 years on to increase spending on defense and NHS (spent lots on the latter), but there was too much spending on other stuff, too much immigration, total much regulation.
"The UK, caught up in endless political turmoil and culture wars, has forgotten the overriding importance of growth for national happiness and well-being."
Perhaps I am just stating the obvious, but that is the real problem with our culture wars. While so many Americans are mainly just horrified by the opposition's culture goals, the two sides are actually in agreement that cultural direction is more important than economic growth.
However, in the belief that it is always important to understand the opposition's motivation, I would like to expand on your reference to the "MAGA movement’s irrational opposition to solar power."
Like the left, the right is a coalition of interests that often just sign on to the goals of other members of the coalition without any real understanding. When it comes to opposition to solar, I always suspected something weird, in that a rather sophisticated public campaign seemed to be operating independent of the GOP and MAGA. And no one, red or blue, seemed to understand quite why.
It took me some time to figure it out. A large number of farmers, including a very high percentage of small farmers, rent at least some of the land they farm on an annual basis. Large solar installations are competitors for this same land, and they are willing to pay MANY times more per acre.
This diminishes the supply of farmland and raises the rent for all. If you are a landowner, this is great. But if your livelihood depends on renting land, this is a threat.
MAGA allies sign onto this cause willingly, given the level of Dem support for green energy, but it is far from a core issue for them. Trump signs on because farmers are an important part of his base -- he is also bending immigration enforcement for them in many instances.
None of this means that we shouldn't build solar, just that we ought to know what unintended consequences we ought to work to mitigate.
“This diminishes the supply of farmland and raises the rent for all. If you are a landowner, this is great. But if your livelihood depends on renting land, this is a threat.”
I might not understand your point. Are you saying the reason we have US problems is because rural renters of farmland are competing with solar?
I am only saying that the formulation "MAGA's irrational opposition to solar power" is a bit misleading. It's not core to MAGA, it's the specific concern of a specific group that has overlap with them, and largely votes Republican. More importantly, it is not irrational, it is a group of Americans very aware of their own interests. However, it is worth noting that people who own and rent out have the opposite interests. And given that they are largely Republican too, the politics are interesting.
I see - that aligns with what I’ve seen as a solar developer. The ones who take issue are at the 301st foot or 1.01 miles beyond the required neighborhood consent zone, or they’re real estate types who care about viewshed and “property value” and farmer identity. The landowners themselves are most often happy to take the royalty check. Both often Republican, but one type is more emotional, the other more rational.
There has been a decades long campaign here in the upper Midwest to generate squads of MAGA crazies fomenting fear and terror. Township planning and Trustee meetings generate death threats to entire families when approvals of either solar or wind projects are on the agendas. Financed largely by the Koch brothers. Check out Peter Sinclair’s videos online. One other point: ~40% of USA corn crop is devoted to fuel ethanol (another boondoggle-it takes 1 gallon of diesel to make one gallon of ethanol🤷♂️). Electrifying transportation will be declining this market, so leasing for VPPs is the best compensation. Land isn’t “lost” to solar, just search on “agrivoltaics”, and it can always be returned to pure agriculture, unlike gated McMansions, fracking, or other industrial projects.
Fantastic observation! This exact dynamic explains why land owners outside Silicon Valley resist tech expansion, and why inner California flips deep red just an hour off the coast.
The most significant and frightening analogues are cultural: (1) extraordinary insularity among an electorate that opts for protectionism; (2) the aversion to science and engineering among the best-educated elites (this is not financialization -- whatever that means -- it is much bigger than that and includes elite students who are not going into commerce, technology, science or business of any sort); (3) the loss of top domestic elites and potential foreign elites to other countries and economies that are more dynamic; and (4) the ever present and overgrown welfare state that breeds dependence among every stratum of British youth from university graduates to council estate kids. We have managed to avoid the fourth factor to date, but the increasing desire for a zero-sum redistributionist socialism among U.S. youth is an ominous sign.
These are factors that have been evident for some time and are far more important than symptoms of these cultural issues - like "overfinancialization." It is not as if anybody in Westminster can really do anything about the long-term structural and cultural factors that led industry to exit the UK and technology to grow more quickly elsewhere. Openness was the logical strategy because it would leverage British strengths and open borders to talent. But the electorate decided differently.
Excellent and chastening analysis. Just two caveats:
a) the success of financial services/City is not the cause of the poor performance of much of the rest of the country which has deep roots - including lack of provision for technical and vocational skills.
b) the UK has not 'cut itself off from its major market. We have a tariff free, quota free trade agreement with the EU. So our relationship with our largest continental market is similar to that of Canada to the US (pre-Trump tariffs). Did anyone ever argue that Canada is "cut off" from the US market and should allow the US to make its laws, trade agreements etc?
c) The article is marred by citing the discredited, non-peer reviewed Stanford study repeated uncritically by those who want to believe its conclusions. It assumes that, but for Brexit, the UK would have grown like a 'doppelganger' composed largely of the USA and that the only factor which caused the UK to deviate from this American dominated bunch of countries post Brexit was Brexit itself. Not diverging energy prices. Not America’s booming technology sector. Not different responses to Covid or the Ukraine war. Not Trump’s huge fiscal expansion. Not the run-down of major British export industries like North Sea oil and gas and its knock-on effect on refineries, chemicals, fertilisers etc. Not whatever factors caused our neighbouring countries to grow more slowly than the US over the last decade.
Indeed, they do not even mention, let alone explain why, countries like France, Germany,
(indeed, the whole Euro-zone) and Canada have also fallen short of American
growth since Brexit – still less mention that British GDP has grown faster
than most of those countries. The nearest they come to doing so is a bizarre statement that "large Northern European countries ... experienced slow growth post 2016. In part this could have been due to Brexit spillovers.” In short, they think Brexit was a significant factor causing the economies of France and Germany to grow more slowly than Britain’s and that whatever other factors depressed these countries’ growth did not affect the UK!
NAFTA is less comprehensive than the EU (with exceptions), but more encompassing than the UK's current trade agreement with the EU. Economic and particularly industrial integration is more intensive in NAFTA due to geographic factors. IP is more integrated in NAFTA, and dispute settlement is much more robust, leading to tighter alignment.
True, NAFTA doesn't have the political integration, but then the US' partners have had to harmonize with the US regardless (standards, content rules, external tariffs, and much more) due to relative size.
Nothing about political centralisation and regional inequality?? Local government in UK utterly powerless (certainly compared with states and cities in US). And on the day Burnham comes in as new PM with a real focus on decentralisation... US writers definitely seem to have a blind spot wrt this issue. Check out the work of e.g. Centre for Cities think-tank, and read Tom Forth!
Benefits are paid to people everywhere and funded largely by the southeast.
Local governments in the US rely on local taxes.
Burnham is proposing a Scottish style arrangement where corrupt local pols with few skills and bad ideas spend other people’s money (London’s).
No at all like US local government.
Fully agree UK government is too London-centric and ignores Econ development problems up North. Handing councils more of someone else’s money just s to me unlikely to be a solution, particularly looking at the fiscal position of many councils (squandered what little autonomy they did have)
Much agree. The US may need a measure of fiscal austerity (fast or slow) to avert fiscal crisis, but only structural reforms, including through demonopolization and international competition, of the supply side of the economy, hence changes in the relative prices (more than volumes) of goods and services that government procures (health, education, etc.), can achieve meaningful results at scale. Plus tax reform. Good luck with that
Most of what finance does is a waste of high quality human capital. There are two primary functions: transactions and channeling money to enterprises that use capital to grow, until earnings become sufficient. Most of the rest is trading baseball cards, with a large vig for the transactions. The net cost to the UK is even higher than to the US in wasted human capital. Find a way to Pigouvian tax this industry down to a reasonable level.
However, Britain left the EU in 2020, not 2016, as most Americans seem to think. So whatever the cause of Britain's poor economic growth from 2016-2019, it can't be due to Brexit. Overregulation is the biggest factor IMO.
I think Brexit was the long-term right move for the UK (with better policies it could have been better in the medium term as well), but it’s only fair to point out that the uncertainty during the 2016-2019 negotiation period was a real economic drag. Businesses couldn’t plan for the future and that hurt investment and growth.
The argument made in this piece is that uncertainty is a big piece of the problem. Once the vote happened, it was obvious that Britain was leaving. The fact that it took four years to hammer out the details may actually have made the situation *worse* for investment.
“ But watching the degradation of the NHS should remind us of why direct government provision of necessary services is so dangerous.”
I just want to remind everyone that this exact attitude is why the nonprofit industrial complex has completely strangled large swaths of urban public services. There are, sometimes at least, real advantages of public production+provision over just public provision.
Covid - the fiscal and policy mistakes (incl re: the NHS) was a bigger issue than Brexit, in part because the UK tried to reel back some of the fiscal incontinence and the US did not.
The UK has greenbelt regs which are a form of zoning and make London environs more expensive.
While on a GDP basis and on a disposable income basis the UK is poor, the housing stock and road conditions are in much better than most US states and commuter rail (not the long distance lines) is fast (if not cheap). You dont need high speed rail when commuter trains go 80mph. Eurostar is good but that is for trips to Paris not internal UK.
One can get to London from Brighton or Cambridge in an hour and a bit and many commuter suburbs are closer to a 30 min train ride. In US cities those distances would be near double the time.
Consumption is very expensive relative to income, but it is designed that way- VAT, energy and sin taxes, etc. works better for European mercantilist economies than the service-oriented UK sector (that difference in model and priorities is why Brexit was sensible even if the Brexit deal was not.)
The British middle and professional classes are heavily taxed relative to the US- 40 pct tax bracket starts at about $70k and few deductions. The government takes 40 pct of what you earn and then 20 pct of anything you spend out of the remainder and then 40 pct of anything left over when you die (inheritance tax exclusions are in the hundreds of thousands rather than millions). It is a territorial system, so the rich who can leave often do leave, as will London bankers accumulating millions today. They aren’t going to retire in the UK with bad weather and 40 pct inheritance taxes.
"You dont need high speed rail when commuter trains go 80mph."
High speed rail isn't a competitor of regional commuter trains. It is a service for longer distances. In the UK context, Glasgow-London would be a good candidate for HSR service, reducing the trip from almost 5 hours to something like 2:15.
Most Western countries have introduced HSR and it is now spreading into places like Morocco and Egypt. The reason why the UK does not have it (except for the connection to Paris) isn't in absence of "need". HSR trains in the UK would be every bit as packed as they are in Spain or Italy. It is because planing of such big construction projects has become so burdensome that the cost has exceeded any rational levels - see for example the famous expensive tunnel for protection of bats that *may not even live there*.
For less than 100 quid return I can fly from 3-4 London airports to Glasgow in 1.5 hours. There is no economic rationale for a HSR line that faster permitting would solve.
The existing train service costs more than that and takes five hours. Glasgow is not Barcelona or Parts or DC or NY. HSR can be profitable between two high volume business destinations.
I’ve taken Eurostar to Paris more than a dozen times (flown, too) and also have used HSR in Italy, Japan, etc. HSR can be great.
Don’t mistake a compliment of London’s fast commuter lines for workers for a criticism of HS, which is not for workers/commuters, unless you spend $200 a day to get to work
Well, a hypothetical Glasgow line would be, in fact, a London - Birmingham - Manchester - Glasgow line, and while I agree that the last segment would be less used than those in between, it might also be built more on the cheap, perhaps just upgrading the existing track to 230 kmph or so, instead of the full 320-350 kmph that is the usual standard on new HSRs.
HSRs are usually not profitable per se, especially when taking the cost of construction into account. They tend to be built to reduce the pressure on the road system (which usually isn't profitable either) and reduce some externalities (such as airport noise). AFAIK the only clearly profitable HSR system is in Japan, but there, the railway company also owns all sorts of facilities around the stations (malls etc.), so the profits from retail support the rail itself.
I think Amtrak makes money ex-capital on its NY-DC, line, though that is not really high speed, and Eurostar is doing better.
In the UK I had a friend who lived in St Albans (45miles outside the city) which had direct train service that could take 30-40 minutes to Blackfriars. My tube journey on the northern line and most of my London colleagues tube journeys were longer than that and less pleasant.
Of course, those suburban towns with that sort of train service are very expensive but still a lot cheaper than London.
I feel like financialization is a bigger part of the story. Unlike other fields of economic activity, finance does not spin off any real positive externalities (other than maybe crypto, which is economically worthless, so actually, it's probably a negative externality) or lead to any meaningful productivity gains. It enriches a certain class involved in finance but effectively impoverishes everyone else because talent and assets are being deployed in this field and denied to the others where productive industries would benefit much more. I am reminded of Joseph Chamberlain's warning of over 100 years ago. It's as relevant as ever today...
"“whereas at one time England was the greatest manufacturing country, now its people are more and more employed in finance, in distribution, in domestic service… I think it is worthwhile to consider – whatever its immediate effects may be-whether that state of things will not be the destruction ultimately of all that is best in England, all that has made us what we are, all that has given us prestige and power in the world. Over the long run the country could not survive as merely a “hoarder of invested securities” if it was not also the “creator of new wealth.” He went in a speech to the country's bankers: “…are you entirely beyond anxiety as to the permanence of your great position?… Banking is not the creator of our prosperity, but is the creation of it. It is not the cause of our wealth, but it is the consequence of our wealth; and if the industrial energy and development which has been going on for so many years in this country were to be hindered or relaxed, then finance, and all that finance means, will follow trade to the countries which are more successful than ourselves.”
This is a really insightful post Noah. Especially for my wife & me. She’s born & raised in Mississippi and she & I lived in London from 2000 to 2012 - pre Brexit. Having travelled a bit into the British hinterland your analogy that England without London is poorer than Mississippi is spot on. Every 100 km you travel north from London seems like a journey 10 years further back in time. Economically & socially. And when those folks voted for Brexit to protest immigration we knew that Trump was an inevitability for the same reason. That’s why the ending to your post is so compelling - there are heaps of lessons from Britain’s post-Brexit decline that we need to acknowledge in the USA. Well done.
In “Shattered” (about Hillary Clinton’s run for POTUS) it was Bill Clinton who said that Brexit was a harbinger of a possible Trump victory. Whatever you think of Bill Clinton, you have to admit he can read a room like nobody else. And he was right.
What is frustrating for an Australian is watching our country heading for the UK Via Dolorosa despite the obvious signals from that disaster zone to go in exactly the opposite direction.
A well thought out analysis as usual. However as a picture of Britain it is a bit one sided. Some of us have been arguing for some time that while GNP per capital is an important measure of welfare it is inadequate. It is much better to focus on the Human Development Index which combines indicators of GDP with health and education as measures of overall welfare in a country (https://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index). If you look at that measure, the UK ranks 13th in the world compared with the US rank of 17th. The growth rate of HDI over the period 2010 to 2023 was 0.24% in the UK and 0.10% in the US.
Brexit was a big mistake, but so was the adoption of austerity policies by the Conservative government in office over the same period which slowed recovery from the financial crash of 2008. In addition Conservative Prime Minister Liz Truss was as reckless as Donald Trump in relation to unfunded tax cuts in 2022. But Britain's unwritten constitution made it possible to sack her within a month and a half, whereas the US is stuck with Trump until 2028.
Finally Copilot points out: 'Britain accounts for roughly 29% of all startups in Western Europe. Within the wider European tech ecosystem, British firms are highly concentrated, attracting about a third of all European venture capital deal value and producing more than a third of Europe's billion-dollar tech unicorns'.
UK grew faster than most of EU post 2008 despite fiscal restraint and a huge blow to its financial sector (unlike most of the EU).
That policy was genius and the UK has more than made up for that briefsort of relative austerity over the last decade of NHS spending increases.
The mistakes were largely during Covid, though letting some of the post 2008 taxes expire while increasing spending on nonsense pre-COVID was also unnecessary (though understandable politically
I think the most instructive comparison point for the UK is France, both in where neither country is doing especially well, and what the UK more specifically is bungling. They're similar-ish sized countries in population, both in western Europe, and both advanced services-oriented economies. Also, neither has exactly had scorching-hot economic growth in the 2020s. I think this points to a general problem medium-sized countries suffer from in our current global economic system, where globalisation is stagnating and the big industries of the future, especially AI, are really capital-intensive. The US overcomes this, and dominates, by being big, an option neither France nor the UK have unless the EU fundamentally changes.
However, there is also clearly a UK-specific problem, one that becomes obvious when you look at the two countries side-by-side as Noah points out. I've lived in France for close to four years in various parts of the country after spending about a decade in England, mostly in the southeast. The standout differences are the French state's ability to lift and shift, and how many fewer options NIMBYs have here.
Because of that, the housing and infrastructure situations in both countries are night-and-day. I now live in an energy-efficient new build in one of the most desirable parts of France. It took some time to get it built, but the local and national governments had the tools to overcome opposition to it. The same would be almost inconceivable in the UK. Similarly, I can get excellent mobile signal in empty farmland in France, but will struggle almost anywhere in England that isn't London.
I think this, and of course the country's famous high-speed rail network, really improve both labour mobility and economic opportunity in cities outside of Paris. The result is not only a stronger economy but one where secondary cities are noticeably more productive than is the case in the UK.
No worker commutes by high speed rail except plutocrats. It is a substitute for a plane ticket, not a commuter trip:
French industry is decentralized and is export- oriented. This and high levels of public sector employment keep the regions afloat, along with decent pensions.
Of course, France has US style debt and deficits and the UK does not…yet. France grows slower than the US, its industries are vulnerable to Chinese competition (US already hollowed out) and survive in part on protectionism (who buys a Peugeot rather than a Japanese or Korean car), and its tax rates are already high .
French youth are often on temp or contract jobs and dream of the factory or government jobs their parents had.
Is quality of life good in France- yes, if you have money and agree better than UK if you do not, but also unsustainable
Noah's slam on the UK for developing "expensive off-shore" wind energy is misguided. This is a rapidly deployed strategy to exploit massive new generation for the UK, with minimal NIMBY opposition. France, in contrast, already has a surplus of expensive 24/7 nuclear generation. Their problem is that during intense heat waves, they have to curtail nuclear because the reactor cooling water gets too hot to release into the rivers. That's why France, and South Korea, have both mandated construction of widely distributed solar canopy parking lot Virtual Power Plants at ALL existing parking lots over 80 spaces, nationwide, within 3 to 5 years, largest lots first. Parking lot owners get new income from 25-year airspace leases on their hot asphalt lots. Small business and residential utility rate payers get readily available, cheap Level-2 EV charging everywhere, AND reduced and stabilized utility rates due to a rapid reduction in peak utility transmission demand during afternoon and evening hours and intense heat waves and cold snaps.
Before you write off the UK and EU for under-performance, consider that a new Pew Research Center report on global renewable electricity generation shows that's the only place where renewable electricity generation (not including nuclear) has already significantly surpassed fossil fuel generation: 48% vs 29%. No other countries are even close, including China and the US. And the UK and EU don't enjoy the abundant, low-cost solar resources of many other nations.
Whether or not offshore wind is the best renewable the UK can implement, it is clearly more expensive than onshore wind or solar. That expense is simply the result of building custom towers for each and every turbine rather than getting prebuilt components.
I agree that offshore turbines produce more expensive energy than onshore wind & solar, but floating turbines are much, much larger, and they are assembled from pre-fabricated parts in port, and then towed out to offshore locations by tugboats, where they're anchored with large chains to pre-fabricated, sunk ballasts. Units that require significant repair or pre-scheduled servicing are towed back to port. it's a massive industrial operation that obviously requires significant scale to be efficient,.... just like offshore oil & gas rigs. But nobody's out at sea on platforms drilling new wells, and power cables to shore require less maintenance than fossil fuel pipelines.
Offshore wind is a massive resource that will only reach it's maximum efficiency when it scales large enough to capture it's surplus to produce storable & transportable ammonia and synthetic jet fuel with electrolysis. Probably by 2040, but could be sooner. This is why US BigOil&Gas has tasked Trump to freeze European offshore wind developers out of US territorial waters as long as possible.
Southern half of France is good for solar in summer, at least
Vive la France!
I live next to the Polish border and I visit Poland often. I am also the sort of person who likes to talk to strangers, like cashiers in a Zabka store.
You can often tell that someone worked in the UK by the fact that they have something UK-related on them or near them. A small pin with the Union Jack, or a scarf, or a picture of London next to their cash registry. They obviously liked Old Blighty.
But they also all agree that the old recipe "go to England for work and make some money" stopped working and that the overall balance of wages, cost of living, safety etc. is now better back home in Poland.
Your analysis hits on many crucial points, Noah, but it misdiagnoses Brexit as an exogenous shock that triggered Britain's decline, when it was actually a symptom of it. Treating Brexit as the primary cause ignores the deeper story: decades of severe regional inequality, chronic underinvestment outside London, and damaging austerity created a disenfranchised electorate looking for a wrecking ball. Brexit didn't invent the UK's structural stagnation—it was the desperate political backlash against 30 years of being left behind. It certainly accelerated the crisis, but it didn't create it.
yes. but. Brexit was like the guy who had a head ache so he shot himself in the head. Yes it was a reaction but it had effects that were largely bad.
He didn't shoot himself in the head. He became disoriented, then was led to the gun by someone with an interest in monetizing his organs.
It's a hypothetical, but it'd be interesting to see metrics of how the UK would've done without Brexit.
Probably like all the other large mature Western European economies still in the EU (Germany, France, Italy). Which is to say, not great. EU membership has very real benefits (and also downsides) but is no panacea
EU membership at least offers the prospect of belonging to a larger and more thoroughly integrated economic block. The EU may have a lot of work to do, but integration is the only way towards a viable economic structure for these smaller countries.
Marcel,
I think you have zeroed in on one of the big issues. There are a lot of fundamental governance and cultural issues.
1) England, Wales, N Ireland, Scotland, London, non-London.... there is way more difference between these entities than any two states in the US
2) Seat of government in London means...places like Birmingham or Plymouth have little voice and local control.
3) history of socialism
4) history of class structure
As a frequent visitor to the UK (from US), I don't find many similarities at a governance level.
The charts show Covid was more the gamechanger
UK’ post GFC recovery was remarkable (given its financial sector) as was its fiscal restraint. Sure it needed to raise taxes 5-10 years on to increase spending on defense and NHS (spent lots on the latter), but there was too much spending on other stuff, too much immigration, total much regulation.
"The UK, caught up in endless political turmoil and culture wars, has forgotten the overriding importance of growth for national happiness and well-being."
Perhaps I am just stating the obvious, but that is the real problem with our culture wars. While so many Americans are mainly just horrified by the opposition's culture goals, the two sides are actually in agreement that cultural direction is more important than economic growth.
However, in the belief that it is always important to understand the opposition's motivation, I would like to expand on your reference to the "MAGA movement’s irrational opposition to solar power."
Like the left, the right is a coalition of interests that often just sign on to the goals of other members of the coalition without any real understanding. When it comes to opposition to solar, I always suspected something weird, in that a rather sophisticated public campaign seemed to be operating independent of the GOP and MAGA. And no one, red or blue, seemed to understand quite why.
It took me some time to figure it out. A large number of farmers, including a very high percentage of small farmers, rent at least some of the land they farm on an annual basis. Large solar installations are competitors for this same land, and they are willing to pay MANY times more per acre.
This diminishes the supply of farmland and raises the rent for all. If you are a landowner, this is great. But if your livelihood depends on renting land, this is a threat.
MAGA allies sign onto this cause willingly, given the level of Dem support for green energy, but it is far from a core issue for them. Trump signs on because farmers are an important part of his base -- he is also bending immigration enforcement for them in many instances.
None of this means that we shouldn't build solar, just that we ought to know what unintended consequences we ought to work to mitigate.
“This diminishes the supply of farmland and raises the rent for all. If you are a landowner, this is great. But if your livelihood depends on renting land, this is a threat.”
I might not understand your point. Are you saying the reason we have US problems is because rural renters of farmland are competing with solar?
I am only saying that the formulation "MAGA's irrational opposition to solar power" is a bit misleading. It's not core to MAGA, it's the specific concern of a specific group that has overlap with them, and largely votes Republican. More importantly, it is not irrational, it is a group of Americans very aware of their own interests. However, it is worth noting that people who own and rent out have the opposite interests. And given that they are largely Republican too, the politics are interesting.
I see - that aligns with what I’ve seen as a solar developer. The ones who take issue are at the 301st foot or 1.01 miles beyond the required neighborhood consent zone, or they’re real estate types who care about viewshed and “property value” and farmer identity. The landowners themselves are most often happy to take the royalty check. Both often Republican, but one type is more emotional, the other more rational.
There has been a decades long campaign here in the upper Midwest to generate squads of MAGA crazies fomenting fear and terror. Township planning and Trustee meetings generate death threats to entire families when approvals of either solar or wind projects are on the agendas. Financed largely by the Koch brothers. Check out Peter Sinclair’s videos online. One other point: ~40% of USA corn crop is devoted to fuel ethanol (another boondoggle-it takes 1 gallon of diesel to make one gallon of ethanol🤷♂️). Electrifying transportation will be declining this market, so leasing for VPPs is the best compensation. Land isn’t “lost” to solar, just search on “agrivoltaics”, and it can always be returned to pure agriculture, unlike gated McMansions, fracking, or other industrial projects.
Fantastic observation! This exact dynamic explains why land owners outside Silicon Valley resist tech expansion, and why inner California flips deep red just an hour off the coast.
The most significant and frightening analogues are cultural: (1) extraordinary insularity among an electorate that opts for protectionism; (2) the aversion to science and engineering among the best-educated elites (this is not financialization -- whatever that means -- it is much bigger than that and includes elite students who are not going into commerce, technology, science or business of any sort); (3) the loss of top domestic elites and potential foreign elites to other countries and economies that are more dynamic; and (4) the ever present and overgrown welfare state that breeds dependence among every stratum of British youth from university graduates to council estate kids. We have managed to avoid the fourth factor to date, but the increasing desire for a zero-sum redistributionist socialism among U.S. youth is an ominous sign.
These are factors that have been evident for some time and are far more important than symptoms of these cultural issues - like "overfinancialization." It is not as if anybody in Westminster can really do anything about the long-term structural and cultural factors that led industry to exit the UK and technology to grow more quickly elsewhere. Openness was the logical strategy because it would leverage British strengths and open borders to talent. But the electorate decided differently.
Excellent and chastening analysis. Just two caveats:
a) the success of financial services/City is not the cause of the poor performance of much of the rest of the country which has deep roots - including lack of provision for technical and vocational skills.
b) the UK has not 'cut itself off from its major market. We have a tariff free, quota free trade agreement with the EU. So our relationship with our largest continental market is similar to that of Canada to the US (pre-Trump tariffs). Did anyone ever argue that Canada is "cut off" from the US market and should allow the US to make its laws, trade agreements etc?
c) The article is marred by citing the discredited, non-peer reviewed Stanford study repeated uncritically by those who want to believe its conclusions. It assumes that, but for Brexit, the UK would have grown like a 'doppelganger' composed largely of the USA and that the only factor which caused the UK to deviate from this American dominated bunch of countries post Brexit was Brexit itself. Not diverging energy prices. Not America’s booming technology sector. Not different responses to Covid or the Ukraine war. Not Trump’s huge fiscal expansion. Not the run-down of major British export industries like North Sea oil and gas and its knock-on effect on refineries, chemicals, fertilisers etc. Not whatever factors caused our neighbouring countries to grow more slowly than the US over the last decade.
Indeed, they do not even mention, let alone explain why, countries like France, Germany,
(indeed, the whole Euro-zone) and Canada have also fallen short of American
growth since Brexit – still less mention that British GDP has grown faster
than most of those countries. The nearest they come to doing so is a bizarre statement that "large Northern European countries ... experienced slow growth post 2016. In part this could have been due to Brexit spillovers.” In short, they think Brexit was a significant factor causing the economies of France and Germany to grow more slowly than Britain’s and that whatever other factors depressed these countries’ growth did not affect the UK!
Agree on your points.
I differ on the NAFTA comparison.
NAFTA is less comprehensive than the EU (with exceptions), but more encompassing than the UK's current trade agreement with the EU. Economic and particularly industrial integration is more intensive in NAFTA due to geographic factors. IP is more integrated in NAFTA, and dispute settlement is much more robust, leading to tighter alignment.
True, NAFTA doesn't have the political integration, but then the US' partners have had to harmonize with the US regardless (standards, content rules, external tariffs, and much more) due to relative size.
Nothing about political centralisation and regional inequality?? Local government in UK utterly powerless (certainly compared with states and cities in US). And on the day Burnham comes in as new PM with a real focus on decentralisation... US writers definitely seem to have a blind spot wrt this issue. Check out the work of e.g. Centre for Cities think-tank, and read Tom Forth!
Benefits are paid to people everywhere and funded largely by the southeast.
Local governments in the US rely on local taxes.
Burnham is proposing a Scottish style arrangement where corrupt local pols with few skills and bad ideas spend other people’s money (London’s).
No at all like US local government.
Fully agree UK government is too London-centric and ignores Econ development problems up North. Handing councils more of someone else’s money just s to me unlikely to be a solution, particularly looking at the fiscal position of many councils (squandered what little autonomy they did have)
Much agree. The US may need a measure of fiscal austerity (fast or slow) to avert fiscal crisis, but only structural reforms, including through demonopolization and international competition, of the supply side of the economy, hence changes in the relative prices (more than volumes) of goods and services that government procures (health, education, etc.), can achieve meaningful results at scale. Plus tax reform. Good luck with that
Most of what finance does is a waste of high quality human capital. There are two primary functions: transactions and channeling money to enterprises that use capital to grow, until earnings become sufficient. Most of the rest is trading baseball cards, with a large vig for the transactions. The net cost to the UK is even higher than to the US in wasted human capital. Find a way to Pigouvian tax this industry down to a reasonable level.
A good summary of Britain's problems.
However, Britain left the EU in 2020, not 2016, as most Americans seem to think. So whatever the cause of Britain's poor economic growth from 2016-2019, it can't be due to Brexit. Overregulation is the biggest factor IMO.
I think Brexit was the long-term right move for the UK (with better policies it could have been better in the medium term as well), but it’s only fair to point out that the uncertainty during the 2016-2019 negotiation period was a real economic drag. Businesses couldn’t plan for the future and that hurt investment and growth.
The argument made in this piece is that uncertainty is a big piece of the problem. Once the vote happened, it was obvious that Britain was leaving. The fact that it took four years to hammer out the details may actually have made the situation *worse* for investment.
“ But watching the degradation of the NHS should remind us of why direct government provision of necessary services is so dangerous.”
I just want to remind everyone that this exact attitude is why the nonprofit industrial complex has completely strangled large swaths of urban public services. There are, sometimes at least, real advantages of public production+provision over just public provision.
Covid - the fiscal and policy mistakes (incl re: the NHS) was a bigger issue than Brexit, in part because the UK tried to reel back some of the fiscal incontinence and the US did not.
The UK has greenbelt regs which are a form of zoning and make London environs more expensive.
While on a GDP basis and on a disposable income basis the UK is poor, the housing stock and road conditions are in much better than most US states and commuter rail (not the long distance lines) is fast (if not cheap). You dont need high speed rail when commuter trains go 80mph. Eurostar is good but that is for trips to Paris not internal UK.
One can get to London from Brighton or Cambridge in an hour and a bit and many commuter suburbs are closer to a 30 min train ride. In US cities those distances would be near double the time.
Consumption is very expensive relative to income, but it is designed that way- VAT, energy and sin taxes, etc. works better for European mercantilist economies than the service-oriented UK sector (that difference in model and priorities is why Brexit was sensible even if the Brexit deal was not.)
The British middle and professional classes are heavily taxed relative to the US- 40 pct tax bracket starts at about $70k and few deductions. The government takes 40 pct of what you earn and then 20 pct of anything you spend out of the remainder and then 40 pct of anything left over when you die (inheritance tax exclusions are in the hundreds of thousands rather than millions). It is a territorial system, so the rich who can leave often do leave, as will London bankers accumulating millions today. They aren’t going to retire in the UK with bad weather and 40 pct inheritance taxes.
"You dont need high speed rail when commuter trains go 80mph."
High speed rail isn't a competitor of regional commuter trains. It is a service for longer distances. In the UK context, Glasgow-London would be a good candidate for HSR service, reducing the trip from almost 5 hours to something like 2:15.
Most Western countries have introduced HSR and it is now spreading into places like Morocco and Egypt. The reason why the UK does not have it (except for the connection to Paris) isn't in absence of "need". HSR trains in the UK would be every bit as packed as they are in Spain or Italy. It is because planing of such big construction projects has become so burdensome that the cost has exceeded any rational levels - see for example the famous expensive tunnel for protection of bats that *may not even live there*.
For less than 100 quid return I can fly from 3-4 London airports to Glasgow in 1.5 hours. There is no economic rationale for a HSR line that faster permitting would solve.
The existing train service costs more than that and takes five hours. Glasgow is not Barcelona or Parts or DC or NY. HSR can be profitable between two high volume business destinations.
I’ve taken Eurostar to Paris more than a dozen times (flown, too) and also have used HSR in Italy, Japan, etc. HSR can be great.
Don’t mistake a compliment of London’s fast commuter lines for workers for a criticism of HS, which is not for workers/commuters, unless you spend $200 a day to get to work
Well, a hypothetical Glasgow line would be, in fact, a London - Birmingham - Manchester - Glasgow line, and while I agree that the last segment would be less used than those in between, it might also be built more on the cheap, perhaps just upgrading the existing track to 230 kmph or so, instead of the full 320-350 kmph that is the usual standard on new HSRs.
HSRs are usually not profitable per se, especially when taking the cost of construction into account. They tend to be built to reduce the pressure on the road system (which usually isn't profitable either) and reduce some externalities (such as airport noise). AFAIK the only clearly profitable HSR system is in Japan, but there, the railway company also owns all sorts of facilities around the stations (malls etc.), so the profits from retail support the rail itself.
I think Amtrak makes money ex-capital on its NY-DC, line, though that is not really high speed, and Eurostar is doing better.
In the UK I had a friend who lived in St Albans (45miles outside the city) which had direct train service that could take 30-40 minutes to Blackfriars. My tube journey on the northern line and most of my London colleagues tube journeys were longer than that and less pleasant.
Of course, those suburban towns with that sort of train service are very expensive but still a lot cheaper than London.
I feel like financialization is a bigger part of the story. Unlike other fields of economic activity, finance does not spin off any real positive externalities (other than maybe crypto, which is economically worthless, so actually, it's probably a negative externality) or lead to any meaningful productivity gains. It enriches a certain class involved in finance but effectively impoverishes everyone else because talent and assets are being deployed in this field and denied to the others where productive industries would benefit much more. I am reminded of Joseph Chamberlain's warning of over 100 years ago. It's as relevant as ever today...
"“whereas at one time England was the greatest manufacturing country, now its people are more and more employed in finance, in distribution, in domestic service… I think it is worthwhile to consider – whatever its immediate effects may be-whether that state of things will not be the destruction ultimately of all that is best in England, all that has made us what we are, all that has given us prestige and power in the world. Over the long run the country could not survive as merely a “hoarder of invested securities” if it was not also the “creator of new wealth.” He went in a speech to the country's bankers: “…are you entirely beyond anxiety as to the permanence of your great position?… Banking is not the creator of our prosperity, but is the creation of it. It is not the cause of our wealth, but it is the consequence of our wealth; and if the industrial energy and development which has been going on for so many years in this country were to be hindered or relaxed, then finance, and all that finance means, will follow trade to the countries which are more successful than ourselves.”
This is a really insightful post Noah. Especially for my wife & me. She’s born & raised in Mississippi and she & I lived in London from 2000 to 2012 - pre Brexit. Having travelled a bit into the British hinterland your analogy that England without London is poorer than Mississippi is spot on. Every 100 km you travel north from London seems like a journey 10 years further back in time. Economically & socially. And when those folks voted for Brexit to protest immigration we knew that Trump was an inevitability for the same reason. That’s why the ending to your post is so compelling - there are heaps of lessons from Britain’s post-Brexit decline that we need to acknowledge in the USA. Well done.
In “Shattered” (about Hillary Clinton’s run for POTUS) it was Bill Clinton who said that Brexit was a harbinger of a possible Trump victory. Whatever you think of Bill Clinton, you have to admit he can read a room like nobody else. And he was right.
Sorry, but when I hear the word “shattered” my brain goes sha dooby sha dooby … shattered shattered.
And IMO Bill was great. AND he likes the Stones.
What is frustrating for an Australian is watching our country heading for the UK Via Dolorosa despite the obvious signals from that disaster zone to go in exactly the opposite direction.
A well thought out analysis as usual. However as a picture of Britain it is a bit one sided. Some of us have been arguing for some time that while GNP per capital is an important measure of welfare it is inadequate. It is much better to focus on the Human Development Index which combines indicators of GDP with health and education as measures of overall welfare in a country (https://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index). If you look at that measure, the UK ranks 13th in the world compared with the US rank of 17th. The growth rate of HDI over the period 2010 to 2023 was 0.24% in the UK and 0.10% in the US.
Brexit was a big mistake, but so was the adoption of austerity policies by the Conservative government in office over the same period which slowed recovery from the financial crash of 2008. In addition Conservative Prime Minister Liz Truss was as reckless as Donald Trump in relation to unfunded tax cuts in 2022. But Britain's unwritten constitution made it possible to sack her within a month and a half, whereas the US is stuck with Trump until 2028.
Finally Copilot points out: 'Britain accounts for roughly 29% of all startups in Western Europe. Within the wider European tech ecosystem, British firms are highly concentrated, attracting about a third of all European venture capital deal value and producing more than a third of Europe's billion-dollar tech unicorns'.
UK grew faster than most of EU post 2008 despite fiscal restraint and a huge blow to its financial sector (unlike most of the EU).
That policy was genius and the UK has more than made up for that briefsort of relative austerity over the last decade of NHS spending increases.
The mistakes were largely during Covid, though letting some of the post 2008 taxes expire while increasing spending on nonsense pre-COVID was also unnecessary (though understandable politically