Financial services industry power and labor market polarization in the UK debt-led growth model

Abstract

This chapter describes the economic structural foundations of the United Kingdom (UK) growth model since the 1980s, regarding output, employment, demand, and income distribution, focusing on those aspects relevant to our goals. It contains a brief analysis of the main institutional characteristics and economic implications of both the financial and labor axes. The chapter explores the impact of the financial and political crisis on both. It shows several stylized facts that define the UK growth model during the years after the Great Recession. Regarding supply factors, the UK economy exhibits low productivity growth rates because of the slowdown of productivity growth in industries that showed high productivity growth in the previous period and, to a lesser extent, because of employment growth in low productivity growth industries. With respect to the labor axis, it is argued that the UK labor market has been characterized by an increasing dualization.