New Battle for Britain
Byline: Richard Rahn, SPECIAL TO THE WASHINGTON TIMES
Warning to tourists - it is now illegal to take a photo of a London bobby (policeman). The time-honored tradition of tourists having their pictures taken with London cops is being dealt a silly death blow by those who control the British nanny-state. The British are not only losing their economic prosperity, but their civil liberties as well.
Will Britain again become the sick man of Europe ? A quarter-century ago, Margaret Thatcher led Britain out of an economic wilderness and enabled it to have the fastest-growing economy among the four big countries in the European Union. Today, however, under Gordon Brown's Labor government, Britain is rapidly rushing backward with pre-Thatcherite economic policies.
Taxes are being raised, government spending is soaring, and deficits, as in the United States and most other countries, are projected to reach record levels. Despite the Thatcher reforms, government spending was only reduced to about 40 percent of gross domestic product (GDP) while the United States was able to keep government spending at about one-third of GDP for the last quarter-century.
The British public sector is almost certain to grow to about 48 percent of GDP, while the U.S. government spending will grow to the old British level of 40 percent of GDP. The large countries within the EU that had government sectors approaching 50 percent of GDP (i.e., France, Germany and Italy) grew at about half the rate of the United States over the last 25 years, with Britain falling in between. Thus it is reasonable to expect British growth to fall to the anemic levels of the other big EU countries and the United States. to drop to the old British levels.
Britain had the first big bank to fail - Northern Rock - as a result of the global financial crisis. The government nationalized not only Northern Rock, but now has also effectively done so with its recent takeover of the Royal Bank of Scotland (RBS). The London property price bubble has burst, and, as in the United States, many people are no longer making their mortgage payments.
As the government attempts to prop up the banks and other affected industries, while expanding the social safety net, deficits will soar. The British will add more than $1 trillion in new debt in the next few years, while its economy is less than one-sixth that of the United States. …