Britain not-so-great anymore, here’s how and why

Great Britain sits on the edge on the eve of India’s 78th Independence Day. The country that once ruled the subcontinent, today witnesses poverty and riots. Another nation in the region, Bangladesh, made all the headlines for riots in the Indian newspapers. It was a right editorial call, given that Bangladesh is India’s neigbour and it is a next doo problem. Britain’s riot is a curiosity.

It is more of a bad news for uber rich Indians for whom London is a virtual private playground, and for modest Indians who think Southall signifies a permanent invitation to emigrate.

Britain, the kingdom that colonised most of the world in the previous century, is not an important country anymore. Most countries, including India, are not important for elites. But some national elites, including Britain’s, suffer from an acute version of this delusion and think they are important.

However, riots in Not-So-Great Britain have an important story to tell — the extent of poverty and despair among the whites, who are an overwhelming majority in the country classified rich by per capita income.

The liberal fallacy

The recent British violence was not just a matter of privileged whites targeting immigrants. As Alastair Lawson-Tancred, a former BBC journalist, wrote in TOI recently, “In the UK today there is much middle class misunderstanding of the miseries endured by Britain’s underclass, afflicted by generational unemployment, poverty, boredom and little hope for the future”.

The British underclass has been extremely unhappy for years now. Angry people riot when they think the government is not listening to them. Triggers can vary. The pile of gunpowder — grievances, frustration, deprivation — is a constant. Labour Prime Minister Keir Starmer responded by sending trouble makers to jail. But no country would be poor if locking up the poor was a solution.

Britain minus London

British poverty can be looked at by taking London out of the country’s territory. The capital city contributes to about 13 per cent of the country’s population, and 22 per cent of its national output. As an analysis in FT by Jon Burn-Murdoch shows, if you subtract London’s economic output from Britain’s, British per capita income falls by 14 per cent, a massive decline. German per capita income falls by only 1 per cent minus Munich, its richest city. And America minus the Bay Area loses just 4 per cent of its per capita income.
The overdependence of Britain on London works against it not just statistically, but also its policy. As Burn-Murdoch writes, there is resistance to creating other economic dynamos.

London minus its Mayfairs

Like any big, rich city, London hides its low income areas. But inequality in London is worse as it is disproportionately crucial for the national economy. Poverty in London tells a grimmer story. There are neighbourhoods like Mayfair — often considered the world’s most expensive district — Chelsea and Knightsbridge where mansions can give minor royalties an inferiority complex. Then there are retail stores where shoppers spend an average person’s life savings on a handbag.

This London is a few light years away from ’hoods like Tower Hamlets, parts of Hackney, and Newham. Even better-off Indians, used to deep urban poverty in their cities, will

recognise the rot and the despair here. Like in Mumbai, some of London’s poorest areas are cheek by jowl with its richest bits, Knightsbridge and Chelsea.

Back to two Britains

Academic research has revealed that in some areas across Britain, a despairing kind of poverty has taken hold. As Per a 2023 report by the Centre for Social Justice, Britain risks “sliding back into the two nations of the Victorian era, marked by a widening gulf between mainstream society and a… poverty-stricken underclass.”

Britain is probably the only high-income country that has to undergo a poverty survey by the UN. A 2024 paper by Patricia Thane noted that the UN expert, in 2018, “delivered an excoriating report expressing shock that a country with the fifth largest economy in the world had one-fifth of its population (14m) in poverty and 1.5m in destitution.”. Britain is now the world’s sixth largest economy, India having bested it in the GDP game.

A lot about poverty in India is said, but much less about poverty in Britain is heard. This is because the ‘rich country’ tag acts as a teflon coat against popular perception.

Thane quotes the reality in another study. “The Resolution Foundation reported in 2022 that from 2010 incomes in France grew by 34 per cent, in Germany 27 per cent, while in the UK they fell by 2 per cent.” The CSJ report quoted earlier had revealed that weekly wages, adjusted for inflation, have been stagnant since the 2008 global financial crisis.

It’s a shocking revelation if this data is further dissected. Falling incomes or stagnant incomes, in popular perception, are the stuff of fourth world countries. But, blimey (as Brits are fond of saying), it’s happening right here in the first world.

The ‘whys’ of British poverty

Tories hacking away at the British welfare state takes a large share of the blame. The Tory counterargument is that government spending was out of control. That’s not a point without merit. As of June this year, British national debt was 99.5% of its GDP.

Both arguments are correct. Britain cannot opt for a big increase in public spending. However, Britain’s public spending, as a proportion of GDP, is less than France and Germany’s. The real problem is that Britain’s economic growth has been slow. Britain’s post-pandemic economic recovery has been slower in most of its G7 peers. Per capita income hasn’t grown much either.

Growth depends on productivity — output per worker. High investment and skilled workers produce high growth. Britain, as many studies suggest, is caught in a low investment/low skills trap. Britain is the only G7 country, per a Reuters analysis, where the share of working age people who don’t work or don’t search for work is higher than it was pre pandemic.

Pre-election data recorded a bump in growth rate. But as another Resolution Foundation study pointed out, that little spark in growth is largely due to growth in population, almost exclusively accounted for by immigration. Angry, poor whites targeted ‘foreigners’ in recent riots. But immigration has a positive economic impact.

The Polish joke

Polish PM Donald Tusk has said overtaking Britain by per capita income is his big priority. Projections show if Polish and British per capita income growth maintain their current trend, Poland might overtake Britain in the early 2030s. The Economist reckons this is unlikely.

But when was Britain in competition with Poland?