If you think that Brexit will create important losses for the UK’s economy, then you are right. The leading experts talk about 5% fall of of GDP.
But just step back a moment and consider the following rough costs for healthcare in the UK and Finland:
- The UK’s healthcare costs some 9.5% of GDP compared to Finland’s 9.7%. In the UK that is equals some €236 billion or some €3 600 for each person and €4 000 per person in Finland.
- The UK’s GDP per person is around €34 000 and Finnish GDP per person is around €39 000.
Now take a look at the cost of helping out failed banks in the UK. The numbers are not precise or even known yet because of the complexity of the support, which has come in many different forms:
- The government has purchased bank shares,
- The government has lent cheap money to banks,
- The government has taken on directly or indirectly on bad loans made by banks,
- The government has guaranteed banking assets with or without receiving any fees.
The UK government has taken on huge banking liabilities after the crisis which it is seeking to reduce over time. They have liabilities for bad loans and still own a huge piece (around 70%) of the Royal Bank of Scotland (RBS), once the world’s biggest bank, that they saved from bankruptcy. Lloyds Bank, also saved by them, has already been sold off, and the assets of 2 other banks, Northern Rock and Bradford & Bingley are just being wound down over the coming decades.
In the years after the 2007 banking crisis the UK government is said to have accumulated banking liabilities around 45% of the country’s GDP within a few years this was halved and now it is around around €100 billion to €120 billion or around 5% of GDP.
These numbers are fantastic in the original meaning of the word – “weird; insane; make-believe.” Medieval Latin also used fantasticus as a noun, “a lunatic,” and Shakespeare and his contemporaries had it in Italian form fantastico “one who acts ridiculously.”
So the UK is faced with a Brexit disaster, and a banking disaster which together are the same size as the annual cost of the country’s healthcare – around 10% of GDP!
Given that the UK is some 10 times larger than Finland, can somebody please explain what is wrong with our healthcare costs when examined as a percentage of GDP?
Small countries, like Finland, that cover huge and empty geographical areas, should be more expensive healthcare costs than countries like the UK – but we do not…
The relative cost of healthcare in the United States (Trumpland for those of you who have never been there) are 17% of GDP, and GDP for each person there is €49 000!
Let’s hope that those people in our government and in our Parliament who admire the American healthcare system, (our PM, Finance Minister, and our Trump-loving Foreign Minister), read this article and learn a thing or two about doing the right thing with healthcare cost management, and banking liabilities…
This last comment is about Nordea, whose total balance sheet is THREE times bigger than Finland’s GDP! Do we really want their HQ in Helsinki after what we know about “strong banks” like RBS? Nobody saw their fall from grace in 2006!