718: The UK economy is collapsing
04-27-2025
PropertyInvesting.net team
The UK property boom from 1995 through to 2022 was stimulated by an ultra-low interest rate financial environment as cheap Chinese labour flooded the west with low cost products helping keep a lid on inflation. It was helped by:
1 Low supply of home building due to planning restrictions and lack of profitability of home building
2 Increasing inward migration of top European talent into London through to the Brexit Referendum of 2016 that led to London being the financial capital of the world
3 UK non-dom status attracting multi-millionaires into SE England creating huge wealth and employment within the UK
4 Low inflation because of a strong Sterling, high GDP growth, cheap purchases from China and India, and importantly the UK being self sufficient in oil and gas
5 Banks accepting double incomes from men and women for increased mortgage lending coupled with low interest rates
However, the UK financial landscape changed in 2016 for ever triggered by the rise of UKIP and the Tory party pressing the panic button firstly announcing the Brexit Referendum, then getting complacent and losing the Referendum, then announcing this advisory Referendum was actually going to be enacted, then going through with it all with economically disastrous consequences. We now have the worst of all worlds lower trade with the EU, most of the same laws and little noticeable benefits for Parliament and control. Since 2016 the UK GDP has been flatlining. Labour are now trying to row back Brexit confusing matters even more.
Our UK management of Covid-19 human created virus was a disaster many lock-downs, a gigantic GDP drop and mass money printing. Rather than focus health advice on high obesity levels, lack of exercise, too much drinking and smoking and very poor diets e.g. the eating of junk food and ultra-processed foods, the government got us to clap for the NHS, prosecuted anyone breaking lockdown rule and generally increasing their control on our society and freedoms. Anyone criticizing the government's handling of Covid was considered unpatriotic and disrespectful to the NHS.
The gigantic public sector expansion during the Covid years and retention of these same people after Cobid - has caused a large drag on the economy. Some of the best talent in the country is now pushing paper and trying to spend money rather than creating value and profits. This also creates a drag on the economy it should not be underestimated the opportunity loss by deploying some of the best talent in the country to money spending projects many of them virtue signally vanity projects and white elephants that end up destroying value.
Since Labour got into power mid 2024 a predictable pattern has emerged. The Labour party's liberal lawyer London elite look down their noses on anyone trying the be entrepreneurial. The word profit is like a swear word in their vocabulary. They view private sector engineers and scientists with distrust. Theses civil servants and politicians are only really interest in the power and prestige of their jobs along with their pensions where the government pays themselves 29% of their weekly wages into their gold plated pension pots. No public sector employees ever gets fired. Jobs for life. An example is - no public sector employee lost their job despite 80 people dying in the Grenville fire - no-one was investigated, no-one was prosecuted, no examples were made despite all the failings. 7 years later - the investigation report had still not been issued - then the Dagenham fire took place that almost had the same outcome. The UK public sector is now proportionately larger than what Soviet Union had just before it collapsed in 1989.
Since 2016, higher costs and lower worker productivity has led to the wholesale de-industrialisation of the UK. It is very clear the Labour party aim to protect their public sector workforce whilst destroying hard working private sector workers the very people that voted then in to help. Its a distorted deeply distressing situation and very corrupt if you think about it. The economies in the Labour heartlands are in collapse. House prices predictably are starting to decline in most urban areas. No-one is being held to account. No-one is taking responsibility. It is like a rudderless ship - with Parliament having seeded control to the public sector judicial system to make it's decisions.
The UK has the highest number of millionaires leaving the country both British nationals and other foreign national the top private sector talent. The brain drain is severe and no-one is talking about it. In a very British way, it is swept under the carpet. Not something that is discussed in the London dinner parties. These millionaires are quietly leaving - they don't want to be followed out the country by the prosecuting tax authorities.
Meanwhile we allow 100,000 illegal immigrants to arrive on our shores each year with no paperwork, no records, very poor education and little hope of creating value for the UK society. We put them up in hotels and follow the European human rights laws. We treat our indigenous homeless people worse than dogs - whilst we put underknown non-national young men illegally arriving up in hotels. They rise to the top of the housing lists.
The government is causing a brain drain whilst encouraging people with predominately poor education to start pulling on our social and health services. Most are young men in their 20s with no paperwork. There are no scientists, no engineers, no technicians, no doctors. You just couldn't make it up. Do we really think this strategy will lead to the UK improving financially and economically? The overall human capital capacity is drastically dropping. An aging population where top talent is retiring. An expanding population of people - many with a poor education that were not born in the UK. Many that can't even speak English. It may just be a cynical strategy by Labour to win votes flood the country with Labour voters from overseas.
The reason for describing this is that the UK is developing into a kleptocracy it is definitely already a gigantic bureaucracy run by lawyers and the public sector. Big on regulations. Low on freedom. The government has zero experience of the private sector, engineering or science. None. How can it compete against the USA and China. The economy is collapsing - it will have collapsed in about five years. Its just logic. It's almost 100% certain if you think about it.
What will happen is:
The public sector will expand further
The private sector will reduce in size proportionally
Deficits will rise
Taxation on the private sector will then need to increase further
More companies will go bankrupt
Unemployment will rise
Mental and physical health will suffer
Inflation will rise
More wind and solar farms and environmental taxes will increase energy costs further
The pound Sterling will decline sharply
Mortgage rates will rise
House prices will crash
Rents will rise
Homelessness will rise sharply - along with crime and drugs use
As far as our industry is concerned, our car manufacturing will collapse for certain because of Tesla and the Chinese EV manufacturers taking over the global markets. With electricity prices 5 times higher than the USA and 10 times higher than China, do we really think the UK manufacturing industry stands a chance? We can't even compete with high cost Germany never mind the dynamic and ultra-competitive China and USA. Our car manufacturing is toast. We predict the demise of:
1 Land Rover Range Rover in Coventry
2 Nissan in Sunderland
3 Vauxhall in Ellesmere Port
4 Toyota in Derby
The European ICE (internal combustion engine) and hybrid car manufacturers cant compete against Tesla and BYD/Nio. There strategies are all wrong and they lose money on every car. Its a totally unsustainable business model building ICE cars in the UK. Most will close in the next 5 years its pretty much baked in at this point.
The low cost coal burning power closed on Ratcliffe-on-Soar as Labour got into power. Port Talbot steel works then closed down. Grangemouth oil refinery is closing down. Scunthorpe steel works is hanging by a thread. Looks like we have outsourced all our manufacturing to China - leaving the UK heavily exposed from a security stand-point, on our enemies for steel, oil, gas and refined products. It's an economic disaster.
What this means for house prices is with interest rates will stay high and inflation high inflation adjusted house prices will have to decline because the employment market is slowly collapsing. There will be more repossessions, more distressed sales and young people saddled with gigantic student debts frankly wont want to take the risk of buying houses at sky-high prices. Multiples of 6-15 times earnings when in the 1970s house prices were around 3 times earnings.
We have concluded that football is the only thing the UK is world class at. It rather reminds us of Rome before their mighty Roman empire collapsed. The Emperor with their Gladiators in the Colosseum. Overpaid sportsmen earning £500,000 a week for kicking a football. 80,000 crowds. Paying £600 for tickets for their families around 3% of the annual gross average wages for someone working in Cornwall. All distracted by the football whilst the economy collapses. The general population putting all their emotional energy and time into the football and the analysis of it when Rome burns.
You get the message the UK house prices will struggle and its difficult for us to recommend investing in UK property at this time, because of the risks of a house price crash, high wage costs, high materials costs, increases in taxation on property, and the risk of prosecution as a Landlord with nimby complaints and public sector jobsworths getting in the way at every opportunity. Too many risks, too many threats, too much anxiety, not enough returns it's pretty simple really.
Until engineers, scientists and/or entrepreneurs are involved in government our economy will collapse. The private sector is being destroyed by high taxation, over-regulation, lack of support and the crush weight of a bloated and expanding public sector. Big government at it's worst. Layers of government to boot.
The next Special Report will focus on some positives the best investments on the planet - which are:
1 Bitcoin Strategy (Microstrategy)
2 Solana
3 Tesla
These top quality assets. All 5-20x opportunities.
We hope this Special Report has given you some interesting insights into the UK economy. If you don't believe what we say in this report - just look back over the 15 years for our track record in predicting!