UK ECONOMY
An interesting report about the UK economy.
This is shown in the Treasury Pink Book, which is rarely reported.
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I recall in the 1970s that there was concern that the UK balance of payments was 10 million in the red.
Prior to the pandemic it is now 140 billion in the red.
This means that the UK is living beyond its means.
It is importing much more that it is exporting.
Until recently this shortfall was made up by invisible earnings, from financial services.
But this is no longer sufficient because the trade deficit is continuing to grow.
Therefore the UK needs foreign investment to make up for the shortfall.
This sounds a good thing, BUT what it really means is that the UK is selling assets to balance the books.
We know that it is selling football clubs.
But it is also selling real estate in London, and UK companies such as water and electric supply companies, and of course car manufacturing.
Currently 56% of UK companies are foreign owned.
Apart from the football clubs, these investments deliver a profit to offshore investors.
What it means is that to fuel UK consumer spending the country is selling its assets.
The problem is what happens when there are no assets which foreign investors want because they do not see a profit?
Of course this explains why the government has been unwilling to clamp down of dodgy Russian money.
