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A few days ago the BBC reported https://www.bbc.co.uk/news/business-66897881 on the disastrous mini budget of the Kwarteng/Truss era, and included this:

Economically, the UK has long enjoyed a privilege in the markets - able to run "twin deficits" on both trade and government borrowing. But this reliance on the "kindness of strangers" funding was shaken by last year's events.

Is it accurate to interpret that as a claim that the UK economy has long been propped up by the financial services industry?

If so, it is fair to interpret it as the UK guaranteeing favourable tax treatment of the financial services companies and their owners and staff, in return for loans etc. which might not be to the advantage of those companies' clients?

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As Wikipedia explains what the twin deficit [often] means in practice is that

In effect, the economy is borrowing from foreigners in exchange for foreign-made goods.

Which is probably what the BBC means by the "kindness of strangers", although the term seems a bit odd in this context.

Also, that it is borrowing from foreigners is not an automatic conclusion, but takes some additional assumptions, which however hold often enough.

Anyhow, this is a macroeconomy concept and is rather unrelated to financial services as a share of the economy, or with how much the government favors that sector's development. (The only real requirement is that the government can borrow [internationally, for the quoted version].) Countries as undeveloped as Ghana (in terms of financial services) can experience a similar situation of twin deficits.

Furthermore, whether the two deficits are bidirectionally related or whether the causality flows only in one direction (and in which one) is one of the more contested areas of macroeconomics, both theoretically and in empirical terms. (The previous link has a decent discussion of these matters.)

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What they mean by "the kindness of strangers" is the willingness of the rich to lend money at interest, rather than the state imposing taxation upon them.

Neither kindness nor strangers are involved. That is simply a propaganda piece.

The UK doesn't guarantee favourable tax status because of a popular benefit from financial services. Rather, the rich control politics, their stronghold is in finance, and they use their corrupt political influence to impose the politics of low taxes (and borrowing instead of taxation) for their own benefit.

What economy the UK used to have, has been severely assaulted by the same interests who can make better profits elsewhere. Infamously coal mining - they smashed and shuttered the entire coal mining industry in Britain, in order to offshore it to lower-wage foreign countries including South America, which they then ship back in by barge.

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  • The UK uses far less coal than it did. In the 70s most electricity was generated in coal stations. Now there are days where no electricity is generated by coal.
    – Caleth
    Oct 4, 2023 at 8:42
  • @Caleth, indeed it just imports oil and gas instead, imports electricity from the continent through cables, or imports goods from China which are made with coal-sourced energy just like when those goods were made in Britain, and steamed over the seas with bunker fuel oil. It's simply self-delusion - revelling in the idea that Britain burns very little fossil fuel because it has no real industry anymore, whilst being dependent on everywhere else that does have industry and does burn fossil fuel.
    – Steve
    Oct 4, 2023 at 8:53

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