Boris Johnson’s in Trouble. But the UK Economy’s OK for Now.
Despite politics and some fearsome statistics, Britain isn’t doing badly thanks to all that stimulus.
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Photographer: Chris J. Ratcliffe/BloombergBritain certainly feels fragile at the moment with runaway inflation, war in Ukraine and all manner of local difficulties plaguing the UK body politic. Already beset by various scandals and electoral setbacks, Prime Minister Boris Johnson suffered even greater body blows on Tuesday with the resignation of both Rishi Sunak, the chancellor of the exchequer, and Sajid Javid, the health secretary, key members of the cabinet.
The economy is another thing altogether, despite the dispiriting news about inflation and energy. The UK isn't actually in that horrible a shape, what with £400 billion ($480 billion) of pandemic stimulus in circulation. If the world tips into an energy shock recession, then this rainy, small crowded island nation ought to hold up better than most. With full employment, a strong banking sector and robust household and corporate balance sheets — and the ability, despite what the last chancellor said, to add more government fiscal stimulus — any downturn can be mitigated. The UK's debt-to-gross-domestic-product ratio remains just below 100%, better than many other major economies, so there’s room to borrow. (Deeply indebted Italy is at more than 150%)