Name: UK’s Catastrophic Economic Crisis is Getting Worse
Uploaded: 2026-01-23T18:26:58.000Z
Duration: 10 min 34 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Last year, more than 16,000 millionaires left the United Kingdom.

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And that's a catastrophe, because millionaires are the people who are creating jobs or investing in these businesses.

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So every rich person leaves the country means that something is deeply wrong with the economy.

But the British economy is still one of the largest economies in the world.

The truth is that the British economy is on the brink of catastrophe.

And it might seem like an exaggeration, but let me show you the facts.

The UK is one of the largest holders of the US treasuries.

That's almost a trillion dollars worth of US treasuries.

And recently it has been exponentially growing its reserves.

So the question is, why wouldn't the United Kingdom take the $900 billion invested in the United Kingdom and build an environment that would keep rich people in the UK or, or attract more rich people from outside the uk?

When rich people come, they create jobs, they bring investment, and

they spend far more money, which grows your gdp, which grows the tax revenues, and

But the reality is that these $900 billion do not actually belong to the British government.

And that's why Britain cannot possibly spend that money.

The global economy runs on the US Dollars, which means that if you want to use dollars, you have to use American banks.

But there are a lot of restrictions with the US Banks, which means that if the rest of the world wants to actually use US Dollars, it is extremely difficult for them to do so, which is why they're using the United Kingdom as the middleman to do business with the US Dollars from all across the globe.

And secondly, there is a huge time zone difference.

When the rest of the world wants to do business, US Banks might actually be closed.

And that's the gap that the United Kingdom is filling.

UK Banks are not as regulated as the US Banks, which means that they can take a lot more risks than American banks.

The problem with American banks is that they're highly regulated.

And even when American bank opens a branch outside the United States, in any other country, it's still being regulated by the United States because the parent company is in the United States.

American companies, American citizens are paying taxes to the United States even if they operate globally.

But that's not the problem that the British banks have.

British banks are trusted by across the world because Britain has been the global financial capital of the world for the last few hundred years.

So the UK has built a business model where it's the place that all other investors are parking their money and buying U.S.

If you want to lend money, if you want to do business internationally, you need to have US Dollars.

But holding a lot of dollars makes no sense because there is inflation and the dollar is losing a lot of its value.

Which is why hedge funds, pension funds, businesses are actually holding the US Treasuries, since they receive an interest rate on that that is higher than inflation.

Which is why all of these financial institutions, in order to do business globally, are holding their assets in U.S.

Which is why when you look at this number, it is not that the British government or British companies, that $900 billion of the US treasuries, but

this money actually belongs to the global investors from all across the globe.

But here is the real problem that the British government is facing.

Over the last 20 years, when interest rates were extremely low, a lot of companies got hooked on cheap money.

They started borrowing as much money as they can, including the United Kingdom.

But now, since interest rates are much higher because there is global inflation, refinancing those debts is a lot more expensive.

Which is why all of these governments suddenly are running chronic deficits.

Between 2024 and 2025, the British government spent about 1.3 trillion pounds, while it received from taxes only about a little over $1.1 trillion pounds.

Which leaves the government with a deficit 137 billion pounds.

That deficit is primarily because the government has to make a lot of interest payments.

And that deficit is 3.7percent of the entire GDP or 8.3% of the entire total budget.

And the only way to fix this is either to bring inflation down to a sustainable 1 or 2% so that interest rates on the debt is going to go down to 1 or 2%.

And at that rate it is going to be sustainable.

The second option is to devalue the currency so that it gets a lot easier to pay off the debts.

Since the economy is measured in the currency, and

that currency artificially could be created out of nothing, you can inflate your currency.

So your total GDP is going to grow, even though that your real economy did not grow.

For example, let's say that 10 years ago you borrowed $3 trillion.

And today the total size of your economy is also $3 trillion.

But what if you suddenly start printing a lot more money?

What if you suddenly print way more money that your total GDP is going to double to $6 trillion?

Now, did the Real size of your economy grew?

You simply inflated your economy by printing more money.

Your debt is still $3 trillion, but now your real economy is $6 trillion.

So the new debt to GDP ratio is not 100% but rather 50%.

And that's how you get rid of your debt, by devaluing your currency.

That's what the United States is trying to do.

It is printing trillions of dollars, lowering down interest rates to drive down the value of the dollar as much as possible to make it way easier to pay off that debt.

That debt is going to exponentially grow, but so will the economy.

Not the real economy, but the economy in US Dollars.

And over time, paying off that debt is going to be a lot easier.

The problem is that the United Kingdom does not have that option.

If you look at the British economy, it is not a self sustaining economy because it's a very little island and it depends on inputs to sustain itself.

Historically, the United Kingdom has always been running a trade deficit.

For example, in 2023 it exported $452 billion while it imported $732 billion.

Because the United Kingdom is geographically very small and it has no natural resources whatsoever.

It, it doesn't have plenty of oil like Middle Eastern countries or even the United States or even Venezuela.

So it can actually extract all of these resources.

Secondly, the UK has a very small population compared to the United States, around 65 to 70 million people.

So you don't have large enough population, you don't have enough resources.

So basically you can actually self sustain yourself.

Which is why the model that Britain has followed historically for the last few hundred years is to become the global financial capital of the world and provide expensive services to investors from all across the globe.

That allows a lot of capital to flow to the United Kingdom.

And also the United Kingdom is going to have a very strong currency.

When you have a strong currency, imports are going to get a lot cheaper because you have a very strong currency.

Manufacturing anything in your country is going to be a lot more expensive than other countries.

And that's why the UK can compete with China on manufacturing buses, on manufacturing cars.

China is always going to win that competition.

And even if you look at the British pound, it is much stronger than the United States dollar.

Even though that the United States dollar is the global reserve currency.

Well, the British economy is a fraction of the US economy because it's vitally important for the UK to have a very strong currency to make it affordable to live in the UK because every single thing is imported from, from food to energy.

That leaves the British government in a very strange dilemma.

On one side, if we are going to continue having a strong currency, it is going to be very difficult to pay off that debt that we have accumulated over the last 20 to 30 years.

On the other side, if you are going to follow the strategy that the United States right now is following, which is devaluing the currency, devaluing the dollar, or even that Japan has followed and devalued its currency to keep its economy sustainable, that means that imports are going to get a lot more expensive, which means that the cost of living is going to drive exponentially higher.

So which option do you think the British government should choose?

Devalue the currency and make it even more expensive to live in the UK or keep the currency very strong.

But the government cannot possibly afford to pay off its debts.

That's why the British government is so desperate.

It's taking actions that it shouldn't take tick because it is hurting the economy in the long run.