I first became broadly aware of politics in the run up to the 1997 general election. During these months and the years afterwards the country felt prosperous like – at least in my memory – it has not done before or since. Many aspects of our culture reflected a new found optimism, and each budget statement seemed to reel off increases in spending across various sectors. Yet in hindsight, it is unclear how much of this prosperity was built on sustainable foundations. Was this the result of sound policy, rising productivity, or lasting investment? Or was it simply the glow of a credit-fuelled boom, flattered by global liquidity, inflated housing markets, and temporarily contained inflation? I tend to think the latter.
We live, however, in a world that is profoundly affected by the viewpoints of financial markets, and it would be prudent to acknowledge some key indicators. Lehman Brother collapsed on 15th September 2008, and I am writing this article 20th July 2025:
March 2008:
Public sector net debt (excluding BoE): £538 billion (approximately 36.8% of GDP).
Public sector net debt (including BoE): BoE debt was minimal so approximately 37% of GDP.
April 2025:
Public sector net debt (excluding the Bank of England): £2,643.8 billion (approximately 89.6 % of GDP)
Public sector net debt (including the Bank of England): £2,813.9 billion (approximately 95.5 % of GDP)
Office of Budget Responsibility, Office for National Statistics*
*Note the exact figures vary slightly depending upon how the figure is calculated. Indeed the graph below puts public debt at higher than 100% of GDP, but regardless of the precise figures used, the broad trends should be clear.
These numbers alone are concerning, but they do not tell the whole story. Three books I greatly enjoyed reading were written respectively by Gary Stevenson, Ray Dalio, and Thomas Piketty. Their theses overlap significantly and paint a concerning picture consistent with the statistics above.
First off, Gary Stevenson is a former trader turned inequality campaigner. He offers a model rooted in the asymmetrical flow of money and notes the consequential increasing concentration of a broad range of assets in fewer and fewer hands. Many readers will have experienced the effects he describes most likely by being priced out of the housing market, or acquiring any form of asset. As a result many individuals are borrowing more than they earn to maintain living standards. Similarly, the government has (at all levels) been stripped of assets: councils have sold off properties and public infrastructure has been privatised. Inevitably this has led to increasing transfers of wealth (from government and an increasing proportion of individuals) to the asset owning class in a self-reinforcing cycle. Stevenson warns that fiscal and monetary interventions are increasingly ineffective in this environment because the core issue of inequality goes unaddressed.
Ray Dalio presents a broader historical framework and approaches the problem from more of a social science perspective. In his “long-term debt cycle” theory, debt accumulation builds gradually until economies reach a point where traditional levers such as interest rate cuts and stimulus spending no longer work. At that stage, political fragmentation accelerates. He then notes the late-stage decline of empires as marked by rising internal conflict, populism, and a breakdown in institutional trust. Economic pressures become social pressures: think here of lack of school funding, a back log in the courts, the NHS clearly in need of reform. I think it is reasonable to say that many countries including the UK have already begun this process of social breakdown, and are enduring a decline in public services.
Thomas Piketty complements both ot these views with a data-rich, historical analysis of capital accumulation and inequality. His central thesis is that when the rate of return on capital exceeds the rate of economic growth, wealth naturally becomes more concentrated. This dynamic, if left unchecked, leads to social and political instability. Piketty shows that without strong redistributive mechanisms such as progressive taxation, inheritance taxes, and substantial investment in public goods, capitalist economies tend toward oligarchy. This supports Stevenson’s warning about the hoarding of wealth and Dalio’s account of rising instability. All three thinkers argue in different ways that inequality is not just a side effect of economic growth, but a force that can destabilise the entire system.
As a thought-experiment, who are the primary wealth producers within the UK economy? Amongst my school and university cohorts the most highly rewarded work in high finance or law, but the number of primary wealth creators is vanishingly small. Is this a sustainable model for any economy? Is it similar to the (often vaunted) structures of the Finnish or Singaporean economies?
So here we are.
I suspect most people are aware of the mounting tensions within their own sectors. In education, the shortfall in funding is impossible to ignore: the reduction of teaching assistants, rising class sizes, an acute lack of SEND provision, and a worrying delay in capital investment, the consequences of which may become more serious over time. These pressures are not isolated to schools, rather they exemplify a wider erosion of public sector funding. As Ray Dalio argues, confidence in an economy may erode slowly, but it often rises or declines sharply with profound effects. Many of the events that influence the trajectories of economies for many years take people by surprise. Think of famous historical examples such as the Wall Street Crash or the world wars, but also more recent examples such as the pandemic or the collapse of Lehman Brothers: all illustrate how quickly sentiment can shift.
We do not know when the next economic shock will come. We do know, however, that when it arrives the UK will enter it with high public debt and fewer public assets than in previous crises, which will severely limit our room for manoeuvre.
If a serious financial shock hits tomorrow, is our education system prepared to withstand it? Have we minimised costs schools pay for staffing, resources, exam entry and recruitment? Will we need to fundamentally change our approach in future?
Another blog post, coming soon.
George Bowman
Founder, Maths Advance
MATHS ADVANCE BLOG 
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