Britain’s Imploding… And Nobody Cares

What a “Doom Loop” Means, How Brexit Created One — And Its Warning to the World

And without any of those? Britain now faces, almost surely, perhaps the bleakest decade in its modern history. One of its bleakest decades for a very, very long time.

That’s not just a problem for Britain — it’s a warning to the world.

(Now, when I say “nobody cares,” I don’t mean you, or the person down the street. But I do mean political figures, parties, the intelligentsia which essentially runs a country, its systems and institutions. I mean nobody with…power. They all seem to be happily pretending things are fine. But, emphatically, in Britain? Nothing is fine.)

What do I mean by “doom loop”? When we economists speak of “doom loops,” we mean self-reinforcing processes. Chain reactions, of a socioeconomic kind. That, when triggered, don’t stop — but just roll on. Until. There’s a crisis, or things — in this case, a country — is spent. If anything, doom loops tend to accelerate.

That’s abstract, so let’s make it real.

What’s happening in Britain? Living standards aren’t just falling, they’re plummeting — the sharpest fall in recorded history. Why is that happening? Brits are caught in the jaws of a trap. On the one side, ruinous inflation is sending prices skyrocketing. In America, inflation’s about 5% or so. In Britain, the average this year has been closer to 10%. Even that understates the depth of the problem, because what’s inflated fastest are basics — food, water, energy, and so on, which make up the majority of the average person’s spending.

At the same time, because wages are largely flat, real incomes are falling precipitously. To give you some idea of what that means, doctors in Britain are on strike — “junior” doctors, which, there, means basically anyone below the most senior level — because they can’t make ends meet. They want a pay rise of 25% this year, and more than that next year.

All of this has been met with a furious response from the Bank of England, which is raising interest rates faster than Donald Trump lies. Well, maybe not that fast. And that’s causing shockwaves to go through what’s left of Britain’s stable social structure. Banks are pulling mortgages. People are discovering they can’t afford their mortgages anymore. A wave of foreclosures and defaults is almost certain to occur.