The Steep Decline of the British Economy

London, Feb 24, 2008— -- As the global economic crisis takes hold, hardly any other country has seen its fortunes wane as brutally as the United Kingdom. Once a model economy, the country has been overcome by a deep sense of uncertainty.

It is a gloomy February in Great Britain, yet another month in which the economy is shrinking and the pound is faltering, and yet another month of record growth in unemployment.

It is a month that has seen Ed Balls, the Secretary of State for Children, Schools and Families, refer to the current recession as the "worst in 100 years," and which has witnessed the heads of the country's largest banks appear on television to apologize to the nation for the harm they have caused.

Meanwhile, Britons are asking themselves how things could have come to this.

Ash Akhtiar, who works for an employment agency in a Birmingham suburb, says that he wants to see someone pay for all of this. David L., a banker who, fearing for his job does not wish to see his name in print, is considering buying a gun to protect his family.

Philip Augar, a financial expert, tries to explain how his country could have become so dependent on banks and loans, while bestselling author Tony Parsons says that the upheaval the United Kingdom is experiencing is as serious as the fall of the Berlin Wall.

The current mood in Great Britain is gloomy. Long Europe's most successful economy, Britain's fortunes have since plunged more than those of almost any other European country.

Unemployment is rising twice as fast as the European average. Two million people have already lost their jobs, a number that could rise to three million by the end of the year. According to the International Monetary Fund (IMF), the British economy will shrink by 2.8 percent in 2009, the greatest projected decline among the seven largest industrialized nations.

Ironically, for a long time it seemed as if Great Britain had done everything right. Didn't former Prime Ministers Margaret Thatcher and Tony Blair bring deep-seated reforms to the country? The British experienced a 16-year economic boom and it seemed as if they had successfully transitioned into a post-industrial, globalized service economy driven by a rapidly growing financial sector.

And now it is precisely those investment bankers who practiced their modern alchemy in the glass towers of the City of London who have plunged the country and the world into the biggest economic crisis since the 1930s. Great Britain was at the root of this worldwide economic downturn and is now especially hard-hit by it. What began 18 months ago as a financial crisis in London and other cities has now taken hold of the entire country.

It began when the British real estate bubble burst, first for residential and then for commercial property. The investment banking sector fell apart at the same time. The country has been in a deep recession since the fourth quarter of last year. Consumption and industrial production are in serious decline, while the value of the British pound has fallen to that of the euro.

Ash Akhtiar is one of the few people working overtime these days in Washwood Heath, a run-down suburb of Birmingham.

Akhtiar is standing outside, smoking a cigarette, in front of a two-story brick building that houses the offices of Jobcentre Plus, the modern British employment agency founded by former Prime Minister Tony Blair. He is waiting for his clients, the workers at LDV, a manufacturer of small trucks.

'You Can See Desperation in their Eyes'

The LDV plant, only a kilometer down the road, stopped producing trucks in mid-December. There are no buyers anymore for the brand-new fleet of white panel vans parked outside. LDV has already laid off 95 workers. With the plant idle, hundreds more are waiting at home, still collecting their wages.

Akhtiar, 31, his hair slicked back with gel, has dark rings under his eyes. Part of his job is to make sure that the unemployed receive their unemployment checks. The situation in Washwood Heath has been so bad for the last three months that Akhtiar and his colleagues have been working on cases every day until 7 p.m., and they recently began coming in on Saturdays.

More and more people are losing their jobs, and more and more are coming to see Akhtiar. "You can see the desperation in their eyes," he says. "They realize that things are different now, and that they won't get new jobs after only a few weeks."