LONDON — What happened?

The British Conservative Party has been in power for the last 14 years but seems on the verge of losing in a big way. At one point, particularly after Margaret Thatcher won in 1979, the Conservatives seemed to have principles they believed in. Thatcherism worked, and most of the public lined up and voted for her.

Shortly before she stood for her second term, I was in a London cab, and I asked the driver what he thought of Thatcher. He said: “I don’t like her. I come from the working class, and we have always voted Labour. But I will vote for her because Britain needs her.” The wisdom of the common man.

The current crop of Conservative politicians have serious disagreements as to what they believe in and the will to fight for whatever beliefs they still have. In sum, they have given the British public little reason to vote for them. Some observers even believe this could be the end of the party — not a pretty farewell for what had been the most elected party for a couple of hundred years. But it is probably most unlikely that the Conservative Party will die given that it has recovered from several near-death experiences since it was formed in 1830.

The British economy was once the powerhouse of the world, particularly at the height of the Industrial Revolution in the 19th century. Its early adoption of mechanized production techniques, extensive colonial empire, and global trading networks propelled it to unprecedented economic dominance. As the 20th century progressed, however, several factors contributed to its relative decline.

One was the erosion of its comparative advantage in manufacturing. While Britain led the world in industrialization in the 19th century, other nations, particularly Germany, the United States and Japan, caught up. They surpassed Britain in terms of technological innovation and efficiency in manufacturing. This was partly because of Britain’s slowness to invest in new technologies and its adherence to traditional industries, such as coal and textiles, that became less important on the global stage.

The two world wars inflicted significant damage on the British economy. The cost of the wars drained the nation’s resources and left much of its infrastructure in ruins. Once a source of wealth and power, the British Empire unraveled after World War II as colonies gained independence and Britain struggled to adapt to its new role in the world order.

Britain lost access to valuable markets and resources, and its influence in international trade diminished. The rise of protectionist policies in other countries further restricted British exports, exacerbating the decline of its manufacturing sector.

Domestic factors also played a role in Britain’s economic decline. Labor relations hindered innovation and productivity growth. Decades of underinvestment in infrastructure also took their toll on the economy, making it less competitive in the global marketplace.

The discovery of North Sea oil in the 1970s temporarily boosted the British economy, but it also masked underlying structural weaknesses. The reliance on oil revenue led to neglect of other sectors, and when oil prices declined in the 1980s, the economy suffered.

The Thatcher era brought about significant economic reforms to revitalize the British economy. Thatcher’s policies of deregulation, privatization, and trade union reform aimed to increase efficiency and competitiveness. While these reforms succeeded in modernizing the economy, her successors were less resolute.

Brexit further complicated Britain’s economic outlook. While proponents argued that leaving the European Union would enable Britain to regain control over its laws and borders, critics warned of the economic consequences of leaving the world’s largest single market. The prolonged uncertainty surrounding Brexit negotiations and the poor execution of the eventual departure from the EU disrupted trade and investment, further dampening economic growth.

The COVID-19 pandemic dealt a severe blow to the British economy and many others, causing widespread disruption and uncertainty. The lockdown measures, being unnecessarily severe and implemented to contain the virus, led to a sharp contraction in economic activity, with millions of jobs lost and businesses shuttered.

Like the U.S. and most other major countries, Britain suffers from too much government spending, regulation, and taxation. Government debt is more than 100% of gross domestic product (which is also true of the U.S., Japan, Italy, France, and many other countries), causing increasing interest payments to crowd out other government spending programs.

Britain could obtain short-term economic relief by again engaging in massive regulatory reduction and allowing fracking for gas and oil. In recent years, huge amounts of now recoverable gas and oil have been discovered both on the island of Britain and again in the North Sea. Britain has been going through an energy crisis because “the Greens” pressured the government to kill much power production from coal, to stop the renewal of the nuclear plants, and not to develop new shale gas (under a mistaken belief that it is environmentally unfriendly). Britain could not only be self-sufficient in natural gas but a major exporter. Gas development would reduce energy costs, being particularly beneficial for lower-income households. With sufficient political will, energy subsidies could be eliminated and, coupled with new revenue from gas exports, would reduce the demand for government spending — a win-win situation.

• Richard W. Rahn is chairman of the Institute for Global Economic Growth and MCon LLC.

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