After reading the following headline in the Telegraph, we wonder if Bank of England governor Andrew Bailey is channelling his inner Elon Musk:

Bloated public sector is damaging economy, warns Andrew Bailey

Mr Bailey notes that public sector employment has risen by 500,000 people since the end of the Covid-19 pandemic.

The paper reports that he also laments that the increase “had not been matched by a rise in productivity.”

Without putting words in his mouth, we can assume he thought or expected that an increase in public sector employment would or could increase productivity. But wherever would he have gotten that idea?

Public sector employment can never increase productivity. At best, it can only make it less unproductive. And that’s at best. But it can never make the economy more productive.

In reality, more public sector workers will only ever decrease the productivity of the economy overall, because it’s the “job” of the public sector to stifle innovation, put a handbrake on growth, and generally make things harder for anyone to achieve anything.

According to the AI Overview on Google, when we asked for the percentage of the UK workforce in the public sector, the answer is, “In March 2024, about 18% of the UK workforce worked in the public sector. This is the highest level since March 2012.”

The source for the data is the Office for National Statistics.

That means almost one in five UK workers is a net drain on the productive side of the economy – the private sector. Every fifth person you see on your commute to work is a public sector worker.

Every fifth person at the football or cricket match or rugby game is a public sector employee. Every fifth working-age member of your family is a public sector employee.

Think about that. It’s quite extraordinary.

The key question then is whether there is any hope for Britain. Is there anything that can happen that will stop the trend towards more and more and more public sector workers?

At what point does the government realise they have run out of private sector workers to tax? In a way, that has already happened. Not just here in the UK, but globally. It’s why government debt continues to rise.

As grim as it may seem, we do have hope. And we are optimistic. Human ingenuity always shines through in the end. We have no doubt it will happen here.

Just when it will happen and how, is a different story. But we’re going to try our darnedest to figure it out.

Links to last week’s essays below.

Hope you’re having a great weekend.

Cheers,

Kris Sayce
Publisher, Southbank Investment Research

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