War does not just test armed services. It tests economies.
Right now, the UK is discovering how fragile its economic model has become. Decades of de-industrialisation, reliance on imports, financialisation and extreme inequality have left the country dangerously exposed to global shocks.
When supply chains break, when energy prices rise, or when geopolitical tensions escalate, the consequences hit the UK economy very quickly.
In this video, I explain why Britain's economic fragility is not an accident. It is the result of policy choices made over the last forty years.
I also explain why a sovereign government has far more capacity to respond to crises than politicians often admit, and what Britain could do to rebuild economic resilience.
Because the real question now is simple: will we redesign the economy for resilience, or continue with a model that collapses when shocks arrive?
This is the audio version:
This is the transcript:
When war breaks out, countries discover very quickly how resilient their economies really are.
We're discovering that in the UK right now. Look how long it has taken to get a single warship to sea in this country.
But the truth is that's not the only problem we've got. The UK is also highly economically fragile right now. That's not because we are poor or because we lack skills or because we lack resources. We are fragile because of how our economy has been designed over the last 40 years, and that design has left us dangerously exposed to external shocks. That's what I'm talking about here.
The first problem we have is simple. The UK depends very heavily on imports. We import a very large proportion of our energy. We import a huge amount of our food. We import manufactured goods, and we import many of the components used in British industry. That means that when global supply chains are disrupted, as they are now, by war and in the past, by sanctions or by shipping problems, the UK feels the shock very quickly. Energy prices rise, food prices rise, transport costs rise, and inflation appears very quickly as a consequence. In other words, we are structurally exposed to global shocks.
The second problem we have is that Britain has hollowed out its productive capacity. Over decades, we have lost large parts of our manufacturing sector. As a result, we have weakened everything about our supply chains. We have instead become heavily dependent upon financial services, property speculation, consumption funded by debt. These sectors may generate profit, but they do not provide resilience when the world becomes unstable. In a crisis, our country needs to be able to produce what it requires, and we have chosen not to.
In addition, our energy system has become fragile. We were at one time energy independent, and we did not learn the lesson and the benefit of that. We are now heavily dependent upon imported gas, and gas is used not only for heating, but also for electricity generation. So when global energy prices rise as they are at present, the UK economy absorbs the shock very quickly. Electricity prices rise, business costs rise, food production costs rise, and households face the consequences. This is not inevitable. We could have gone much more heavily for renewable sources of supply. It is the result of policy choice that we are now in crisis.
Then there is the fact that we have tolerated extreme inequality in the UK, and that is another reason for our fragility. A very large proportion of the population in the UK has very little financial resilience at all. Millions of households have minimal savings. They cannot make it to the end of the month without dipping into borrowing. Many are already struggling with housing costs, energy bills and food prices. That means only a relatively small economic shock can push larger numbers of people into real hardship. An unequal society is not resilient; it is brittle. When pressure arrives, it cracks quickly.
Perhaps the most serious problem of all that we face, though, is ideological. For decades, the British political class has said that government must limit deficits, government debt is dangerous, and markets must always come first. As a result, when crisis arrives, governments hesitate in this country. They worry about bond markets. They worry about fiscal rules. They worry about political narratives about debt. But in reality, a sovereign government that issues its own currency always has the capacity to act when it is necessary. The constraint is not money. The constraint is real resources, labour, energy, food, and infrastructure, and these are precisely the things that Britain has neglected.
So let's be clear. The UK economy is not fragile because of fate. It's fragile because of choices. Choices to de-industrialise. Choices to depend on imports. Choices to tolerate inequality. Choices to prioritise finance over production, and choices to limit the role of government in protecting economic stability.
War exposes all of this. It is forcing us to confront realities we would rather ignore, and what it reveals about Britain is this: our economic model has prioritised efficiency, profit, and financialisation over resilience, but resilience matters, and most particularly, it is what matters now, because when shocks arrive, whether from war, pandemics, or climate change, economies that cannot adapt quickly suffer.
The good news is that this is not irreversible.
Britain could rebuild domestic production.
We could invest in energy independence.
We could strengthen our supply chains.
We could reduce inequality.
In other words, we could design an economy that is built to endure uncertainty rather than one that collapses whenever the world becomes unstable.
And in an era like the one we are now entering, that may be the most important economic choice that we can face.
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Interesting article by George Monbiot about why renewables are such a controversial issue
https://www.theguardian.com/commentisfree/2026/mar/13/uk-energy-prices-soaring-war-iran-fossil-fuel-north-sea
‘…….Renewables are highly competitive and, for this reason, low-profit. Fossil fuels are uncompetitive and high profit. Media proprietors, like almost all billionaires and hectomillionaires, gain exceedingly by investing in them. If it is sometimes hard to tell the difference between fossil-fuel lobbyists and the billionaire press, this is because there isn’t one. For the sake of the ultra-rich, we are all being gaslit…..’
Much to agree with
Forgot to add, George Monbiot lives in Totnes I think so perhaps someone else to invite to the Bristol meeting?
Might I ask what you think of the role of somebody like George would be in the meeting?
It is a serious question. Is the meeting to be about Funding the Future, or a broader gender? You are implying the latter. So far, I am not getting the impression from feedback that this is what people are looking for. Anyone could run such an event, but only we can run a.Funding the Future event with the peculiarities that we bring to the show.
I suggest inviting him and others as attendees, nothing more to hear what is said and hopefully make friends and influence people
OK!
Thanks to all for a most relevant article!
Might a factor in the increase in the economic power, and so other powers, of China be its governmental control of rentier propaganda and activities?
Might a factor in our financial, economic, military and social weakness, and our underfunctioning legal set up, be consequences of Austerity/Neoliberalism which treats those not in the controlling caste as lesser beings to be exploited?
Agree. At the core of all this: the City of London, the black hole at the heart of UK failure, sucking in talent (all those potential engineers – sucked into finance), spending on London-focused infrastructure (& not on the rest of the UK). Total failure to capitalise on UK inventions e.g. 1980, Ferranti – field programmable gate arrays FPGAs – used world wide in loads of electronic devices. UK benefit = ZERO. ARM the software company, sold off (god knows who owns it now), etc etc. Large sections of the city of London need to be closed down. Private equity, reduced, parasites like Goldman Sachs, expelled, insultants (McKinsey), expelled. They bring no value only distortion, corruption and the on-going reduction of the UK to a serf-based economy, in the service of finance.
The next government needs to legislate to eliminate the City of London corporation. No more “Lord Mayor” no more other bullshit (the “rembrancer”) and a breakup of its territory to be absorbed by adjoining Local Govs.
Just in time manufacturing, which relies on fully functioning supply chains, was invented in Toyota in the 1950’s and implemented in the 1970’s onwards. I learnt about it a few years later. Perhaps it made sense in the 1950’s in Japan after the war. But it initially struck me as being a naive philosophy that relied on the integrity of supply chains. It still strikes me that way. Clearly it takes short term gains at the expense of longer term robustness. It is assumes that nothing can go wrong, or perhaps merely doesn’t care.
It seems like this naive philosophy has infused British society since then. It’s the idea that if things are going well now we can rely on that happening forever. So the country doesn’t need manufacturing – we will always be able to import whatever we like. The country can operate on financial services – people will always want our service and we can rely on this as a source of income. The cold war ended so we need a minimal military. And so on. This was never true and recent events, the pandemic, the Ukraine war, and now war in the Golf have demonstrated this clearly.
Perhaps this is one reason why the UK economy is fragile. It’s been designed that way based on the, flawed, just in time principal.
Agreed
I could not agree more about this comment – this is what happens when you stop domestic investment in the hope of ‘inward investment’ from abroad – which is just a down payment on access to public assets and private ownership and less democracy and sovereignty.
This is a well known British disease which has not been cured because essentially our establishment want to sell us off wholesale to anyone who will pay and take a nice big cut for themselves.
This can only mean one thing: British society at the very top has failed and it must be deposed in some way, preferably via what is left of our democratic processes.
Thanks.
Thank you, Richard.
Last Saturday, I caught up with an army officer I have known for 20 odd years as he’s my godson’s best friend. He’s currently in Whitehall and reports that, with regard to procurement, the chickens are coming home to roost. Decades of deindustrialisation, corruption and having professional politicians with little or no experience outside politics and lobbying have led to forces unable to take back the Channel Islands if France invades.
He added that Tel Aviv is burning, the US has no plan and is not winning, and Iran is unlikely to lose. He and other professionals have no desire to fight for Israel.
I need to send a longer summary privately to Mike and you.
Thanks.
We are most definitely not being told the truth about the success of Iranian missile strikes and the destabilising the fact that these are having. The myth of Israeli impregnability has been shettered, but the world is not talking about it as yet. Why a compliant media have done as they are told.
The US/Israel censorship and the main stream media compliance is clouding the picture.
The UK Defence Secretary says the ” the Russians are aiding Iran”!! Sorry but what have you authorised? Aiding the US. What do you think will happen to UK assets/troops in the region as a result?
Stupid beyond belief.
As Richard raised in Cambridge ” what are we defending “? The UK needs to go through the proper process of accepting reality. The UK is no longer a world power, there is no special relationship, our economy has been gutted for the benefit of the elites who scream for subsidies otherwise they will leave.
Just like the tech bros, the UK elites are not able to survive without, state subsidies for financial services, state contracts for defence, police surveillance, construction etc.
Public procurement in the UK is a joke. The UK does not know what it wants, gets screwed by the private sector companies, see PFI contracts. The result, crap end products, services and massive subsequent overspend.
All because of the myth that the private sector is better. Utter crap.
We are repeatedly told ” there is no money for the peasants”. Well the peasants need to start revolting and get change for a much better life.
That question, “what are you defending?” still seems critical to me.
As you say Richard ” what is the UK population expected to defend”? A neoliberal, austerity driven state with the majority of the population under the cosh? Or a state that uses its resources for the benefit of the majority with a caring, sustainable future?
Who fancies being cannon fodder for the current UK state?
Reading about the current liquidity issues with Blue Owl, Blackrock, Blackstone, Morgan Stanley and JP Morgan which has locked in retail investors to private credit funds, there seems to be a perfect storm brewing. The BDC/private credit market has a major whiff of 2008 sub-prime securitisation about it. The impact of the war will put pressure on indebted businesses, increasing defaults, and the general public will want to get their money out, just to discover that they can’t so there will be a “run” on the banks. I hope I’m wrong.
Saw this too. Blackstone are not allowing their investors to take out more than 5% of their funds within a certain timeframe. Think it was three months. Happy to accept funds but unwilling to pay back. Ponzi scheme