Skip to content

An economic calamity facing Britain

Marxist Analysis · 2026-05-13

Core Argument

The article argues that British capitalism is in a state of terminal decline, not a temporary downturn. The central thesis is that the post-2008 "recovery" has exhausted itself, leaving the UK economy structurally weakened: growth is among the lowest in Europe, productivity growth is at its lowest in 200 years, and living standards are being squeezed by stagnant wages, rising inflation, and mounting household debt. The author claims that Brexit uncertainty merely exacerbates a deeper crisis rooted in the system's inability to generate productive investment despite abundant cheap money. The conclusion is that only the overthrow of capitalism and the introduction of a socialist plan of production can resolve the situation.

Theoretical Grounding

The analysis is grounded in the Marxist theory of capitalist crisis, particularly the notion that the system periodically exhausts its capacity for expansion and enters phases of stagnation. The article implicitly draws on the concept of overaccumulation: capital is abundant (£700bn in cash reserves) but cannot find profitable outlets for productive investment because of excess capacity and weak demand. Instead, capital flows into speculative bubbles — a classic symptom of fictitious capital inflating asset prices rather than expanding productive capacity.

The argument also reflects the Marxist understanding that falling productivity growth is not a technical problem but a social one: without investment in high-skilled jobs, the rate of exploitation cannot be sufficiently raised to restore profitability. The article's emphasis on consumer debt as a temporary prop for demand — debt that must eventually be repaid — echoes Marx's analysis of credit as a factor that postpones but intensifies crises.

The piece sits firmly within the Trotskyist tradition of political economy, which stresses the permanent and deepening crisis of British capitalism as a declining imperialist power. It rejects the notion that reformist measures within the system can address the underlying contradictions, and it treats the prospect of a new world slump as an inevitability, not a risk.

Conjunctural Relevance

The article was written in November 2017, at a moment when the UK was negotiating its exit from the EU but before the final terms were known. The specific data points are now dated, but the structural dynamics described have only intensified:

  • Growth: The European Commission's forecast of 1.1% growth for 2019 proved broadly accurate; UK GDP growth averaged around 1.4% between 2017 and 2019, and has since been battered by the pandemic and the cost-of-living crisis.
  • Productivity: The UK's productivity puzzle has not been resolved. Output per hour remains stagnant compared to pre-2008 trends, and the UK continues to lag behind comparable economies.
  • Household debt: Consumer credit has continued to rise, reaching over £200bn by 2023. The warning from Standard & Poor's about cyclicality in consumer credit proved prescient as the cost-of-living crisis pushed more households into arrears.
  • Investment: Business investment has remained subdued, with the £700bn cash pile cited in the article growing further. The Bank of England has repeatedly noted that uncertainty — first Brexit, then COVID, then the energy shock — has deterred capital expenditure.
  • Inflation and interest rates: The article notes the Bank of England raising rates to 0.5% in 2017. By 2023, rates had risen to 5.25%, the highest in 15 years, as inflation peaked above 11%. The cheap money era ended, and the debt burden the article warned about became a live crisis.

The article's prediction of a "new world slump" was partially vindicated by the COVID-19 recession of 2020, though that was triggered by an exogenous shock rather than an internal crisis of overaccumulation. However, the underlying stagnation the article describes — low growth, low investment, falling living standards — has been the persistent reality of British capitalism for over a decade.

Where the Argument Continues

The article is a snapshot of a particular conjuncture (late 2017), but the argument it makes about British capitalism's terminal decline is developed across multiple IDOM articles and broader Marxist texts:

  • On the British economy: IDOM has published numerous follow-ups tracking the same indicators — productivity, debt, investment, inflation — through the Brexit process, the pandemic, and the cost-of-living crisis. Articles by Rob Sewell and others on the "cost-of-living crisis" and "the crisis of British capitalism" extend the same analytical framework.
  • On the world slump: The article's claim that a new world slump is looming connects to IDOM's broader analysis of the global economy, particularly the series on "The World Economic Crisis" and articles on the tendency of the rate of profit to fall. The argument that the post-2008 recovery was the weakest in history is a recurring theme.
  • On Brexit: The article treats Brexit as an exacerbating factor, not a cause. This is consistent with the RCI's position that the EU is a capitalist bloc and that leaving or remaining makes no fundamental difference to the crisis of British capitalism. This is developed in other IDOM articles on Brexit and the left.
  • On reformism: The article's conclusion — that only socialist revolution can resolve the crisis — is the political corollary of the economic analysis. This is developed in IDOM articles on the Labour Party, the trade unions, and the need for a revolutionary party.

The argument is also continued in Against the Stream episodes, particularly those on the British economy and the global slump, where the same data is updated and the political conclusions drawn.

Connections

This article should be read alongside:

  • Marx's Capital, Volume 3: Particularly the chapters on the tendency of the rate of profit to fall and the role of credit in crises. The article's analysis of cheap money and speculative bubbles is a concrete application of Marx's theory of fictitious capital.
  • Trotsky's The Death Agony of Capitalism and the Tasks of the Fourth International (The Transitional Program): Trotsky's analysis of the "death agony" of capitalism — a period of permanent crisis, war, and revolution — provides the theoretical framework for the article's claim of "terminal decline."
  • Ernest Mandel's Late Capitalism: Mandel's analysis of the long wave of stagnation after the post-war boom is the theoretical backdrop for the article's claim that the "recovery" is the weakest in history.
  • Other IDOM articles on the British economy: Particularly those on productivity, household debt, and the cost-of-living crisis, which update the data and extend the analysis.
  • IDOM articles on the world economy: Articles on the global slump, the Chinese economy, and the US economy, which situate the British crisis within the broader crisis of world capitalism.

Key Quotes

  1. "Why bother to invest when there is excess capacity (over-production) and weak demand? This is particularly the case given the uncertainty of Brexit. Cheap money is just being used to buy up assets, producing speculative bubbles in the economy, rather than being used for productive investment."

  2. "Productivity growth, the hourly output of workers, has been falling. It is at the lowest level for 200 years! Without the necessary investment into high skilled jobs, this will remain a permanent feature of the British economy."

  3. "This debt is not serving to increase living standards but simply to maintain things as they are. This is clearly not sustainable. That is why recently, Standard & Poor's, the ratings group, cautioned that 'past experience shows that lenders find it hard to avoid inherent cyclicality in consumer credit, and the impact can be severe.'"

  4. "The so-called recovery is clearly going nowhere. Indeed, it is the weakest in history. A new slump could plunge the world economy into another Depression, with all the consequences that will mean."

  5. "British capitalism is in a state of terminal decline. On this basis, we are facing a nightmare situation for working people. Our only hope is the overthrow of the system and the introduction of a socialist plan of production."