The UK's Strange Collapse

A domino capable of knocking down others

In theory, the UK dodged a bullet by withdrawing from the EU back in 2020. Once again in control of its borders and budgets, it had the chance to slow immigration to a manageable rate, rationalize its tax, spending, and regulatory regimes, and chart its own course as a free, wealthy financial center and mid-tier geopolitical power.

Instead, it behaved as if Brexit had never happened, nearly doubling immigration from 2019 levels:

The result was political chaos., with the current government — installed only six months ago — seeing its disapproval rating spike to 63%.

Deficit spending has continued unabated, with public sector debt now approaching 100% of GDP:

Meanwhile, and most baffling of all, the UK went full-frontal authoritarian, imposing draconian controls over speech both online and at the dinner table. Thousands of Britons are now in jail for memes and tweets.

Capital is Fleeing

Britain’s governance breakdown is a financial earthquake.

Millionaires (and presumably billionaires) are leaving for greener pastures …

Interest rates are spiking even faster than in the US …

And the pound is in freefall:

How Dangerous Is a Collapsing UK?

The UK’s financial and cultural suicide is not a global threat on the level of, say, Germany’s de-industrialization or Japan’s financial death spiral. But it is a $3 trillion economy. London remains a global financial center, and British culture, while less influential than in decades past, is still pervasive.

So yes, the UK’s financial/political crisis will matter to the rest of the world. It’s a domino capable of knocking down others. And as this post is written, it’s falling hard.