I have been around the financial services industry since 1991, and a lot has changed since then. The Internet wasn’t widely available for general consumption. Most people didn’t have an email address. Smartphones didn’t exist. My car had roll-down windows, and I had dark brown hair.
Westinghouse, Sears, Bethlehem Steel, Eastman Kodak, F.W. Woolworth, Union Carbide, Allied-Signal, Texaco and the Aluminum Company of America were all members of the Dow Jones Industrials Average. The current largest company in the world by market capitalization, Nvidia, didn’t even exist, as in it wasn’t a thing at all. Arguably, IBM was the proverbial 800-pound gorilla in the technology world, at least I remember thinking so.
However, despite all of the change I have witnessed over the years, I am not sure I can remember a time which was as head-scratching as the current one. The only two potential candidates would be the crazed runup in dot.com stocks before the tech bubble crash, and the befuddling housing and bond markets preceding the Financial Crisis of 2008-2009.
That isn’t very good company, is it?
Don’t get me wrong. I am not standing on the ledge. However, it is arguably easier to make a worst case argument than a best case one. The reason? Well, there are a number of them, but I am going to focus on only one today. I will tackle others in the future.
Of particular morbid interest to me is what is increasingly appearing to be the prolonged economic stagnation the United Kingdom. The table below shows ‘Constant GDP Per Capita’ for both the United Kingdom and the United States using ‘2010 U.S. Dollars’ from the end of 2002 through 2024. Essentially, this is the time period between the end of tech bubble crash through the most recent observation.
Data source: https://fred.stlouisfed.org/series/NYGDPPCAPKDGBR#
| Year | UK GDP Per Capita | US GDP Per Capita | UK / US |
| 2003 | $ 41,706.83 | $ 49,662.75 | 84.0% |
| 2004 | $ 42,434.82 | $ 51,098.56 | 83.0% |
| 2005 | $ 43,320.56 | $ 52,393.45 | 82.7% |
| 2006 | $ 43,945.00 | $ 53,335.59 | 82.4% |
| 2007 | $ 44,882.14 | $ 53,889.40 | 83.3% |
| 2008 | $ 44,508.29 | $ 53,442.71 | 83.3% |
| 2009 | $ 42,146.51 | $ 51,611.32 | 81.7% |
| 2010 | $ 42,762.72 | $ 52,555.77 | 81.4% |
| 2011 | $ 42,791.09 | $ 52,956.66 | 80.8% |
| 2012 | $ 43,136.70 | $ 53,738.15 | 80.3% |
| 2013 | $ 43,585.19 | $ 54,462.63 | 80.0% |
| 2014 | $ 44,627.88 | $ 55,394.45 | 80.6% |
| 2015 | $ 45,255.34 | $ 56,572.92 | 80.0% |
| 2016 | $ 45,888.01 | $ 57,151.47 | 80.3% |
| 2017 | $ 47,018.03 | $ 58,151.70 | 80.9% |
| 2018 | $ 47,514.78 | $ 59,526.67 | 79.8% |
| 2019 | $ 47,864.76 | $ 60,750.99 | 78.8% |
| 2020 | $ 42,982.46 | $ 59,194.67 | 72.6% |
| 2021 | $ 46,487.34 | $ 62,680.25 | 74.2% |
| 2022 | $ 48,433.01 | $ 63,886.13 | 75.8% |
| 2023 | $ 47,934.94 | $ 65,186.60 | 73.5% |
| 2024 | $ 47,960.91 | $ 66,356.17 | 72.3% |
Remember, these are ‘inflation-adjusted’ numbers. As such, the table suggests the ‘average Briton,’ as defined in this manner, is little better off today than they were in 2017. Furthermore, Britain appears to be falling behind the United States in terms of economic output at an increasing rate.
Not surprisingly, this has led to some measure of discontent.
Of course, there are those who would blame the Brexit shambles. Others point to immigration policy and demographic pressures from the Middle East, South Asia and Africa as contributing factors. In truth, there are any number of potential reasons and/or grievances. However, where the rubber meets the road, the UK is arguably underperforming, and the country isn’t happy about it. The reasons why don’t matter anywhere near as much as the solutions.
On May 7, 2026, the ruling party (as I suppose you would have to call it), Labour, lost an eye-watering 1,498 ‘council seats’ in local English elections. There is no putting lipstick on this pig; it was a drubbing as bad as you will see. For its part, the somewhat nascent Reform UK picked up a like number of seats, after having only 2 previously. The so-called Tories lost 563 council seats, and the far-left Greens picked up 441.
Labour and the Tories got a thrashing in Scotland and Wales as well. Essentially, it would seem to this Yank, that the British have had it with their ruling establishment. What’s more, it would seem the non-English are weary of taking orders from London.
‘Separatist’ parties Sinn Fein, Plaid Cymru and the Scottish National Party (SNP) all have the most seats in their respective ‘devolved’ parliaments: Northern Ireland, Wales and, obviously, Scotland. While none of these have a clear majority to wrest their countries from the proverbial fold, it has to be more than a little concerning to someone in Westminster that the regional dissatisfaction is increasing.
Now, just because some folks scream about wanting independence doesn’t mean they really want it. I, mean, does Scotland really want to assume its share of the UK’s debt? Would Wales or Northern Ireland for that matter? Given the highly centralized governing structure in the kingdom, would any of the constitute countries in the UK, other than England, really have the necessary infrastructure and bureaucracy to go it alone? Finally, since pretty much everywhere outside of London ‘receives more than it puts into’ the public coffers, well, it might not be in their best interest(s) to separate themselves from existing fiscal support structures.
In truth, London appears increasingly disconnected from the broader UK economy — perhaps to the point that it could declare independence from it.
Perhaps as a result of all of this recent unpleasantness, the British bond market has gotten absolutely hammered recently, and not in a fraternity house sort of way.
- To that, the yield to maturity on their current 10-Year Gilt (4.75% due 10/22/2035) was 4.23% on February 27th, according to Bloomberg.
- This past Friday, May 15th, it closed at 5.17%.
That is an extremely sharp increase in yield over a relatively compressed period of time. It is all the more alarming given the fact there hasn’t been a substantive change in the Daily Sterling Overnight Index Average Rate (SONIA) since December 2025.
To this old bond guy, that is suggestive of a lack of confidence in either the UK economy, its political leadership or some combination of the two.
Speaking of the UK economy. If someone were to ask you what economic sector is going to be the most innovative, creative and profitable over the next, say, decade or two, how would you answer? What do you think will have the highest growth rates? What is your gut or kneejerk response?
Did you say technology or communications? Understanding they won’t always perform the best at any given point and time? Shoot, they might not even perform at all. However, IF someone were to make you bet $100 of your own money on one economic sector, only one, what would it be?
With your answer in mind, the following table outlines what Bloomberg Financial reported were the largest economic sectors, by market capitalization, in the FTSE 100 Index (FTSE) on May 15th, 2026. Roughly speaking, the FTSE is to the UK stock markets what the Dow or S&P 500 is to the U.S.:
| Sector | Weight (%) |
| Financials | 24.87 |
| Consumer Staples | 14.11 |
| Health Care | 13.18 |
| Industrials | 12.85 |
| Energy | 11.19 |
| Materials | 8.87 |
| Utilities | 4.59 |
| Consumer Discretionary | 4.55 |
| Communication Services | 2.15 |
| Not Classified | 1.61 |
| Information Technology | 1.02 |
| Real Estate | 1.01 |
You can read into the data what you would like. However, where push comes to shove, and based on my professional experience, the UK stock market appears to suggest the UK economy is what we might define as a “slower growth, old economy,” at least on its face.
In the end, unfortunately for our friends in the UK, meaningful improvement may require policy changes that encourage a far greater pro-growth economic agenda. And, by growth, I am not talking about increasing the size of government and government handouts. No. I am talking about innovation, entrepreneurship and creativity.
If Britain can get back some of what made Britain strong in the first place, there is no reason why it can’t prosper and remain a major power. However, if it continues down the path it has been on the last decade or so, it might find itself in a hole from which it can’t dig out.
It is just math. Seriously.
- IF the ‘UK GDP Per Capita’ continues to increase at its annualized growth rate from 2003-2024, it will be roughly $57,018 in the year 2050.
- By comparison, if ‘US GDP Per Capita’ increases at its growth rate over that same period, it will be $94,994 in 2050.
If so and as such, the average Briton will generate about 60% of the average American at that time…well less than Mississippi does today. That is crazy to think about. IF the UK doesn’t alter its current rate of growth, it could be poorer than the poorest state in the United States within a quarter-century.
I guess in Alabama, instead of saying “Thank God for Mississippi,” we will be able to say “Thank God for the British.” Or something along those lines.
It is crazy how times have changed.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this and every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
John Norris
Chief Economist
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