“The sun never sets on the British Empire”
So vast was the size of the British Empire between the 18th and 20th centuries that the above phrase was used to express her vastness. It was then estimated that Britain controlled about 25% of the populated territories across the world which meant that at any point in time, there was daylight in one part of the expansive Empire.
By 1913 before the First World War, the British Empire had over 412 million people in the territories under her control and this amounted to about 23% of the world population at the time. By 1920, the Empire covered 35.5 million KM square which was about 24% of the earth’s total land area and as a result of this, they were able to amass great wealth and spread their language and culture across the world in the process.
By the end of the Second World War in which Britain and the allied forces emerged victorious, Britain became the second richest country in the Western world. Second only to America which had become a behemoth courtesy of the industrial revolution of the late nineteenth century. However, just sixteen years after the war in which West Germany had been heavily devastated, the German economy was able to grow bigger than the British economy. By 1965 the French economy which was also shattered by the war, was at par with the British economy thus signifying an end to the dominance of Britain in post-war Europe.
However, due to the strong foundation that had been laid for the British economy as a result of Britain’s global domination for close to 200 years, a strong manufacturing base, and her huge cultural influence across vast regions of the world, the British economy continued to attract a lot of patronage. It grew steadily with the services, manufacturing, tourism, and manufacturing sectors being the main drivers of the economy.
Within the services sector is the financial sector where London is the second leading financial center in the world second only to New York City. The city of London is a major hub for trading in foreign exchange and Bonds in addition to banking and insurance services. The London Bullion market is also a leading global market for gold and silver bullion trading while Lloyd’s of London is the world’s leading marketplace for insurance and re-insurance.
Given the strong foundation in place, the British economy was able to grow by an average of between 3 and 4% per annum between 1946 and 2003, while she was able to grow real wages within the economy by an average of 33% every decade between 1970 and 2007. However, since the 2010s to date, real wages have stagnated in the United Kingdom and this might be indicative of an even bigger decline in the economy of the world’s once-biggest global empire.
Another major structural shift in the economy of the United Kingdom was the British exit was the European Union which is popularly referred to as Brexit. This officially took place on the 31st of January 2020 as a result of a referendum that took place on the 23rd of June 2016 in which the British people voted to pull out of the European Union.
While the decision to leave the EU can be described as more emotional than strategic, the jury is still out to determine the real impact of Brexit on the British economy because the two major issues of the Covid-19 pandemic and the war in Ukraine distorted economic activities across the region and has made it more difficult to measure the real impact of Brexit on the British economy.
Though it wasn’t much of a surprise when it was announced that the United Kingdom had slipped into recession in the last quarter of last year as the British economy had stagnated for the past two years as a result of the war in Ukraine which disrupted the supply chain across Europe and led to an unprecedented spike in the cost of goods and services in the region, it betrayed the fact that the British economy was still vulnerable and it depended more on the rest of Europe than they had imagined before Brexit.
Apart from the low economic growth rate that the British economy has been subjected to recently, the United Kingdom recently lost her position as the world’s fifth largest economy to her former colony, India which is indicative of the changing dynamics of the global economy. This and other economic developments should serve as an alarm bell to the United Kingdom that she needs to wake up, stop living on her past glory, and start planning for the future if she is to remain relevant in the decades ahead.
Another pertinent issue is the changing dynamics of the world economy especially concerning Renewable energy, Information and Telecommunication Technology (ICT), emerging cheaper manufacturing hubs in Asia, food security, and the determination of China and Russia to wrestle control of the global economy from their Western adversaries. All these would certainly lead to a new world economic order and only the best prepared and equipped countries will emerge on top by the time the global economic re-alignment is over.
As a result of this, the United Kingdom needs to go back to the drawing board and come up with a long-term economic plan that will ensure the future growth of the country as what worked for her in the past 200 years will certainly not work going forward. They need to assess their strengths and weaknesses while identifying the opportunities and challenges the emerging global economy presents while coming up with a comprehensive economic framework that will address all the issues and take advantage of the available opportunities. The recent economic challenges suggest that the British economy is not as resilient as it used to be and in a rapidly evolving world, it’s only wise that they re-strategize if they are to remain relevant in the emerging world economic order.
Oshobi, a development economist, management consultant, and author. writes from Lagos, Nigeria