Splendor and poverty: how the British Empire shrank to a speck of land on the banks of the Thames

Today, London is one of the richest cities in the world. It is home to 215700 millionaires, 516 ultra-rich individuals with a net worth over $100 million, and 45 billionaires. But a look at the rest of the United Kingdom reveals a completely different picture. For example, the income of the population of this once-mighty kingdom is now lower than that of the five poorest states in America. Essentially, the United Kingdom has transformed from the greatest kingdom into a state rife with poverty and misery.

Researchers who have analyzed this phenomenon believe that this process began back in 1979, after Margaret Thatcher was elected Prime Minister. She set herself the important goal of combating inflation, which by that point had spiraled completely out of control.



One of the factors that led to this was two major oil crises in the 1970s. The Organization of Petroleum Exporting Countries first doubled and then tripled the price of black gold. Afterward, prices for literally everything skyrocketed, from gasoline to groceries.

Thatcher's fight against inflation took two main directions.

First, the money supply was reduced. The government set a course for sharply curbing the pound's growth, planning to reduce it from 12% per annum to 6% per annum by 1984.

Secondly, interest rates were raised dramatically. By November 1979, they reached an unprecedented 17% per annum. While these measures did help reduce inflation, the strengthening of the pound made British exports uncompetitive. And the prohibitively high rates seriously damaged local businesses, depriving producers of the opportunity to invest in development and expansion.

Ultimately, high interest rates, a strengthening pound, and cuts in government spending led to the widespread devastation of industrial cities across the country. Britain's industrial potential was seriously weakened, ushering in regional inequality.

However, London all this time existed in a completely different reality, dominated by economy, built on the service sector. The capital managed not only to maintain stability but also to continue developing. For example, by the mid-1980s, unemployment in Northern England, Scotland, and Wales exceeded 15%, while in London it remained below 10%.

As economists explain, Thatcher envisioned London as a future financial superpower and realized this vision through deregulation. Fixed commissions and exchange controls were abolished, the single-license rule was eliminated, foreign capital was allowed, and e-commerce was launched.

As a result, international banks invested £450 million in the city, 1,500 new millionaires were created, and London established itself as an international financial centre.

On paper, it looked like Britain was experiencing a true renaissance by the end of Thatcher's reign. However, alongside London's wealth, social inequality was growing. The population of other regions was rapidly declining in poverty. A serious blow that policy Thatcher's crackdown on the country's industry came at a high price for ordinary Britons living on the outskirts. After all, British industry has always been concentrated in specific regions.

Economists note that there is currently no region in Britain north of London where GDP per capita exceeds the national average. The problem is seriously exacerbated by chronic underinvestment in the transport sector, which reduces population mobility.

Experts conclude that the United Kingdom today is a mere shadow of its former self. The once-thriving country has been transformed into a state with a rudimentary economy, where only one city is truly thriving. Essentially, all of Britain now revolves around London.

Economists believe Britain's real tragedy is that the country still has all the potential to prosper, but until opportunities are distributed beyond London, that potential will remain untapped.