Hey guys, it's Sasha. The UK economy continues on its path to nowhere. In the third quarter of this year, the UK economy stagnated and did not grow at all. That's 0% growth in GDP And in the two quarters before that, the economy grew 0.3% and 0.2% If you're wondering whether this is good or bad.

In the same three quarters, this year, the US economy grew 2.2% 2.1% and 4.9% In the most recent quarter, the UK economy is imploding, but you wouldn't know it because you see the UK economy flatlines but avoids recession. This year says Sky News UK economy to avoid recession this year as GDP growth beats forecasts says the times the UK government and the media want you to think that this stagnation is a good thing because you do know it could actually have been worse. The forecast you see predicted a decline in GDP in Q3, but it came in at zero so it beat the forecast. quick.

Get the champagne out of the fridge. Oh, because GDP is just above zero and not negative. We are not in a recession, so it's time to celebrate. For some really peculiar reason, people are very obsessed with whether or not we are technically in a recession, but there is no actual difference between having minus 0.1% and 0% growth in GDP.

If it's minus, it is technically a recession. If it's zero, it's not, But there isn't any material difference. The fact is zero is still, when you compare it to the US pumping 4.9% in the same exact quarter, and it's not surprising High Inflation has meant that people suddenly can't afford things that they used to be able to afford. and this inflation is now becoming incredibly persistent and so demand for products and services is collapsing.

You can see that as inflation came in, people started using credit cards. the blue bars on this chart so that they could make ends meet. I Actually went and got the full data set from the bank of England for the UK credit credit card lending in millions of pounds. And here is the chart.

You can see that during the pandemic, we had this big down Spike Because people were not spending money, were actually paying off credit for the first time ever. But in the last 2 years, credit card spending in the UK is at record levels, again matching the previous highs from 2003 to 2004. And here is a chart of household deposits in the UK. This is money held in savings accounts Isis and things like that.

You can see that at the same time as credit card spending began going up sharply, people also began withdrawing their savings. This is because people cannot afford to pay for their basic bills. And here's the overall chart. The blue bars are those same household M4 deposits the savings that people have and you can see that in 2023, people stopped saving money and on top of people not spending money and people not saving money, businesses are also struggling to get funding.

Funding has become a lot more expensive since interest rates went up. And remember how the UK government first locked the whole country down and then made every small business take out huge loans just to make it through? Remember that? Well, those loans were typically linked to the Bank of England base rate. So the UK government forced all of these businesses to close. You didn't have a choice, you didn't have an option.

This meant that the businesses had absolutely no choice but to take out the loans that the UK government was forcing the banks to give out during Co And now those small businesses are paying 10% interest on their loans because the typical terms were something like four to 5% above base rate. There is only one winner here, and that winner is the banks. So the businesses are struggling to get customers because their customers don't have any money. At the same time, those businesses are paying a boatload of interest on debts that they shouldn't have had in the first place.

And on top of that, getting new funding is extremely difficult and very expensive. Everyone in the media is discussing when the Bank of England will be able to start reducing interest rates. Andrew Bailey Had to come out with a statement that the Bank of England is not currently discussing interest rate cuts and it is absolutely bizarre that this is an actual point of debate. The latest inflation print in the UK was 6.3% on Cpih.

the real inflation that includes housing and you can see that housing costs have only just started going up and are about to begin exerting a huge amount of upward pressure on inflation. Interest rates in the UK are at 5.25% so at the moment the rate continues sitting significantly below the rate of inflation. Now this might actually change next week when we get new inflation data because in this new inflation data where we'll see the first month since the energy price cap reduced so we will see a very sharp one-off drop artificially in that one part of inflation which will bring the overall number down and it might be quite a big drop. But when the data comes out next week, get ready for all the headlines celebrating that inflation has been defeated.

Rishia Sunak has achieved its Target Though it has nothing to do with Rishia Sunak or anything that the government has done. The truth unfortunately is the exact opposite. Services Inflation in the UK is very stubborn and remains High because of wages. Wages are currently going going up at the fastest rate in recorded data.

In the latest available data to August. Average wages in the UK have been going up by 8.1% year on-ear so businesses are having to pay more and their profit margins are getting smashed. So you might think that these businesses are going to be forced to do something about it and you would be right. Look at this chart showing the number of employees on pae in the UK.

After Co, we had a big rise in payroll employees. There are a few contributing factors here. changes to benefits also played role and remember, this graph is only showing you a relatively small part of the Y AIS so the growth is a little bit exaggerated. It looks bigger than it actually has been, and the UK population has also been growing during this time, which will naturally contribute to the number of people being employed going up as well.

But anyway, the number of payroll employees peaked in June this year and has started to slowly decline. but it's actually a lot worse than it looks. Here is a completely different graph from a different government report showing the change in the number of people who are employed in different different ways. And you can see that since the start of Co, the actions of the UK government have basically destroyed small businesses in the UK.

These are three-monthly periods and the scale on the left is in thousands. So the numbers here are going from min-2 million on the scale to plus 1.5 million and this chart is incredibly powerful. The number of full-time self-employed has fallen a lot, and the number of part-time self-employed has also Fallen a lot. The blue bars at the top show that at the same exact time as those numbers were falling, the number of regular full-time employees has massively increased, so you can read between the lines.

Small businesses got destroyed, completely obliterated, and were forced to go out and get a job. The payroll data is telling you the opposite of what is actually happening in the economy. At the same time as all of this is happening, we're seeing the start of a second wave of inflation. Insurance Prices have begun going up at an insane rate, piling even more Miser in people who already can't afford to pay their bills.

and we're at the start of a wave of people who will see their mortgage payments go up when their fixed terms expire. In many cases, payments will be going up between 50 and 100% And I Did some analysis on when this is going to start and the answer is right now. So over the next couple of years, people who already cannot afford to pay their bills, people who now pay several times more for things like energy than they used to, those people will now have their mortgage payments going up and double as a final kick in the nuts. And you don't need to have a PhD in economics to know what's going to happen when people come afford to pay for their houses and how much those people will be able to spend on other things, the fact that the Bank of England and the media is wildly celebrating, the fact that the economy has already flatlined with all of that coming is astounding.

If you set your forast slow enough, you can go and beat it every time. It's a bit like a kid coming back from school with an F grade and then saying well, at least it's not a G right? It could be a G. Does G even exist because the forecast you see was for G So F is actually pretty good, right? Don't look over to the USA who got an A+ no? That would be completely unfair. No.

Instead, in the comments, people will say that it's far more accurate. Far better to compare yourself to another loser, another underperformer like I Don't know. Germany It's the classic self-defeating argument to go and compare yourself to the worst possible option to say. Well, you did.

Okay, You, you tried. You get a participation trophy. You know you didn't do quite as bad as this other person over there. Look, Inflation in the UK is only double what it is in places like the US and many other countries, but it's way better than in Turkey.

And in Venezuela and Argentina, the UK economy is in the and the UK government and media pretending that everything is okay does not solve the actual problem. Printing government sponsored headlines saying that 0% GDP growth is a good thing doesn't actually solve the problem. It doesn't actually get the economy going. and this is the complete fast of the UK economic collapse that that is happening right now.

Instead of taking urgent action to solve the problem to address the issues, the government is sticking their fingers in the ears and going la la la. Everything is fine. You know they're too busy Saving Face and playing pretend instead of actually stimulating the economy instead of supporting small businesses instead of stopping the death of Entrepreneurship and the complete collapse of small business in the country Instead, a few days ago, the UK government scrapped caps on Banker bonuses which kind of tells you where the priorities sit in. Instead of addressing the mortgage crisis that is happening right now, the UK government is just buying a bigger broom to sweep it all under the carpet.

This is not going to end well, but the UK government has zero accountability, zero credibility, give absolutely no about helping the people, and they have shown that they are completely incompetent. It is really sad because we sat here watching a car crash in slow motion and we're trying to tell the driver to look at the road and take urgent action to avoid the crash to do something different, but the driver is busy putting on a fake smile and saying it's all under control literally as the front of the car is hitting a concrete wall at 100 m an hour.