The UK trade unions have issued the latest warning: a fiscal black hole of £43 billion.

If no more funds are injected, local governments are on the brink of a massive collapse!

How did the UK reach this point?

Why is the US considered the biggest driver behind the scenes?

Today, let's explore how the once-great British Empire has fallen to this state.

The first thing to mention is Brexit.

Back then, the UK was determined to leave the EU.

This departure has had significant consequences, greatly affecting trade.

Previously, doing business with other EU countries was smooth sailing, with various preferential policies and convenient conditions.

Now, tariffs have shot up, and trade barriers have been erected.

Advertisement

Many businesses are at a loss, with costs skyrocketing.

How can they continue to operate?

As businesses struggle, government revenues naturally decrease.

It's like having a great stall in a bustling mall, only to be suddenly relocated to a remote corner.

Can business thrive in such a situation?

Looking at the UK's industrial structure, the country once shone with its manufacturing industry, but later, following the US's example, it gradually shifted its focus to financial services and similar sectors.

While the financial services industry sounds prestigious, it also carries significant risks.

When the global economic situation takes a turn for the worse, and the financial markets experience even minor fluctuations, the UK economy can be severely impacted.

Just like during the global economic crisis a few years ago, the UK's financial sector was hit first.

Many banks fell into difficulty, and the government had to spend a lot of money to bail them out.

Where does this bailout money come from?

It has to come from the treasury, right?

This puts a lot of pressure on the public finances.

Moreover, the UK's welfare system is also a significant issue.

The UK's welfare is well-known for being generous, with free healthcare, education, and a myriad of subsidies.

This is generally a good thing, reflecting the state's care for its people.

However, there are downsides to such generous welfare.

On one hand, the government has to spend a lot of money to maintain these benefits, creating a heavy fiscal burden.

On the other hand, it can also lead to a dependency mindset, with people less willing to work.

This creates a vicious cycle where the government spends money to support people, but tax revenues don't increase.

Looking at the political situation in the UK, it has been quite unstable in recent years.

One moment someone is in power, the next they're out.

Policies change constantly, which makes it hard for businesses and investors to feel secure.

They are reluctant to invest, fearing that a policy change could wipe out their money.

Without investment, how can the economy develop?

The UK's fall to its current state is not just due to its internal issues; the US has certainly played a significant role.

First, behind Brexit, there is the shadow of the US.

Some political forces and interest groups in the US, driven by their own interests, verbally supported Brexit.

Why?

Because after Brexit, the UK would be more dependent on the US in trade negotiations and other areas.

The US could use this opportunity to expand its trade influence over the UK and gain more economic benefits.

This external encouragement and support have, to some extent, pushed the UK towards the decision to leave the EU.

Brexit has severely impacted the UK economy, as we mentioned earlier, with increased trade barriers, damaged business investments, and suppressed imports and exports.

In terms of trade, after Brexit, the UK had hoped to quickly reach a favorable trade agreement with the US to compensate for the loss of trade with the EU.

However, the US has not been proactive in trade negotiations with the UK after Brexit.

The UK has been left in a difficult position, thinking they had found a new ally, only to find that they had embraced a fickle partner.

This has directly led to the UK's inability to obtain new trade support in the economic transition period after Brexit, plunging the economic recovery into despair!

Secondly, in the financial sector, the US's influence is not to be underestimated.

The Federal Reserve's monetary policy adjustments, especially decisions on interest rate hikes and cuts, have a significant impact on global financial markets.

The UK's financial market is closely linked to that of the US, and the Federal Reserve's interest rate hikes can lead to capital outflows from the UK, with funds flowing to the US.

This has caused a severe shock to the stability of the UK's financial markets.

The UK's banking sector, securities markets, and other financial areas have been significantly affected, leading to overall economic instability in the UK.

Furthermore, competition from US financial institutions in the UK market has also put a lot of pressure on local financial institutions.

The financial services industry is a key pillar of the UK economy, and any hindrance to its development is absolutely fatal to the overall performance of the UK economy.

The US's stance and actions on the international political stage have a direct impact on the UK economy.

For example, trade frictions and political disagreements between the US and the EU have put the UK in a dilemma when dealing with its relationships with the US and the EU.

The UK has to maintain its special relationship with the US while considering its economic ties with the EU, a classic case of trying to have it both ways.

This political uncertainty directly affects the UK's economic decision-making and investment climate.

Sometimes, the US's military and foreign policies can also involve the UK.

For example, the US's military actions in the Middle East have led the UK to invest a lot of resources in military and diplomatic efforts to coordinate with the US.

This not only increases the UK's financial burden but also distracts the UK government from focusing on domestic economic development.

It's like being too busy to clean up one's own mess and yet still trying to manage someone else's bathroom etiquette – isn't that being led astray by the US?

Lastly, in terms of industrial structure, the US's leading position in the technology sector puts immense pressure on the UK in terms of industrial upgrading and transformation.

It's difficult for the UK to quickly develop emerging industries, which means economic growth lacks new momentum.

Moreover, many of the US's industrial and trade policies have led to some manufacturing moving from the UK to the US.

For example, the US's tax cuts have attracted many multinational corporations to shift their production bases from the UK to the US.

This has impacted the UK's manufacturing industry, exacerbating the issue of industrial hollowing out and further worsening the economy.