Why Britain’s Economy Has Been Stuck For 20 Years

Summary

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Prof G Markets (June 23, 2026)

Episode: Why Britain’s Economy Has Been Stuck For 20 Years
Hosts: Scott Galloway ("Prof G"), Ed Elson
Guests: Paul Johnson (Economist & Provost, Queen's College Oxford), Brian Kurzmack (Portfolio Manager, GQG Partners)

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Episode Overview

This episode takes a deep dive into the tumultuous state of Britain’s economy and political landscape ten years after Brexit. With the country on the verge of its seventh prime minister in a decade, hosts Ed Elson and Prof G analyze why UK economic growth has stagnated for twenty years, what’s driving the nation’s political volatility, and what lessons can be drawn for policymakers worldwide. They are joined by economist Paul Johnson for an incisive look at the UK’s challenges and by portfolio manager Brian Kurzmack to discuss the market impact of ongoing Middle Eastern tensions, particularly regarding the Strait of Hormuz and global energy prices.

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UK Politics and Economic Malaise: 10 Years After Brexit

Guest: Paul Johnson
Key Segment: 03:00 – 12:52

The Fall of Another Prime Minister

• Context: Keir Starmer has announced his resignation less than two years after a landslide win, raising questions about chronic leadership volatility in the UK.
• Paul Johnson on Starmer's Downfall:

  "He started doing what some of us would argue were quite sensible things like small reductions in some of the benefits that pensioners... received. There's some very big tax rises that were introduced, despite the fact his manifesto said that he wouldn't introduce big tax rises... He’s a decent, hard working, honorable man, but has really failed to connect with the electorate."
  (04:09)

Chronic Political Instability

• Recent PMs Recalled: Discussion of Sunak, Truss, and Johnson—all marred by scandals, missteps, or unpopularity.
• Ed Elson's Framing:

  "It seems as though every single leader is botching it in some way. And I start to wonder if this is because these leaders are actually unqualified... or if it's something more systemic." (05:24)

• Paul Johnson's Macro View:

  "We've had now actually nearly two decades of really, really poor economic growth. Average earnings today are pretty much the same as they were 20 years ago... that's why people now talk about a cost of living crisis."
  (06:25)

Economic Stagnation: Why Is Britain Stuck?

• Causes Identified:
  • After-effects of the global financial crisis, amplified by UK's outsized financial sector.
  • Brexit’s enduring uncertainty, weighing down investment and productivity.
  • Inefficient planning and tax systems; barriers to construction and innovation.
  • Education system shortcomings.
• Paul Johnson's Quote:

  "We've got a very difficult planning system. It's very hard to build stuff here. There are certainly elements of our education system that could be better. Incredibly complicated tax system which is definitely creating problems for growth."
  (08:11)

Looming Leadership: Andy Burnham

• Who is Burnham?

  "He's a better politician than Keir Starmer... might be a little bit more left wing... He calls it a form of business friendly socialism. How that is likely to play out on the national stage, we don't know."
  (09:38)

• Uncertainty on Policy:

  "He's toyed with greater public control of some industries, but we don't know what that means. Highly unlikely to be full scale nationalization." (09:38)

Policy Consensus? Elusive.

• Technocrats vs. Politicians:

  "Tax reform is quite difficult when your people aren't getting better off... Making it much easier to build things is quite unpopular... among technocrats there are... ideas about what you need to get growth. But politicians... have shied away from doing those things because they appear to be electorally unpopular."
  (11:49)

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Global Markets: Strait of Hormuz & Oil Uncertainty

Guest: Brian Kurzmack
Key Segment: 16:20 – 27:56

Strait of Hormuz: Open or Closed?

• Recent MOU signed by the US and Iran but uncertainty persists. Oil traffic through the vital waterway has stalled, causing market jitters.
• Brian Kurzmack's Assessment:

  "Iran can talk about the closure of the strait, and there's almost this asymmetric impact... just the talk... sends insurance prices through the roof... you're seeing a situation where it's probably an $80 plus [a barrel] floor."
  (17:53)

The Oil Price Floor Rises: Market Consequences

• Increased Floor: Geopolitical risk and logistical hang-ups mean a persistently higher price for oil, with companies and investors building in a risk premium.
• Ed Elson's Reflection:

  "The level of risk and the level of confusion and uncertainty around the strait seems to me to be now more elevated, which would make me think that the floor on the price of oil has just fundamentally been raised."
  (19:41)

Why Aren’t Oil Prices Higher?

• Inventory Draws: Strategic reserves are cushioning the impact, but stockpiles are running low, heightening future risk.
• Brian Kurzmack Details:

  "What I think you're seeing is... you’ve offset a decent amount of that supply... through inventory draw. Even last week we had a 17 million barrel draw... Cushing, Oklahoma, you're at essentially effective tank bottoms... You get any lower, you start getting rust and stuff in the bottom of the barrel..."
  (20:39 - 24:11)

Looming Inflation & US Economy

• Higher energy costs are feeding into producer prices and consumer prices.
• Kurzmack on Ripple Effects:

  "[Shipping spot rates] are up 40% since the start of the Strait of Hormuz closing. I mean that literally filters into everything... upward pressure on inflation."
  (25:25)

• Tech and interest rates: Higher rates threaten valuations in tech, with major implications for the market due to heavy sector concentration and debt raising needs.

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Reflections: Brexit’s Lasting Legacy & The Wider Warning

Host Reflection by Ed Elson
Key Segment: 28:00 – 29:40

• On the 10th anniversary of Brexit, Britain's woes are stark: GDP per capita and investment both far below where they’d otherwise be.
• Ed Elson’s Closing Commentary:

  "The same decision that ruined the UK economy, that destroyed the nation's politics for possibly decades to come, that same dilemma is now playing out in America. Tariffs are America's Brexit. The preconditions were the same, the arguments are the same, and now we will see what the outcome will be. My guess is that it will be the same. The UK is a warning to the rest of the world... We know how this goes. We know how it ends. All we have to do is look."
  (28:55)

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Notable Quotes & Timestamps

• Paul Johnson:

  • "Average earnings today are pretty much the same as they were 20 years ago. That's really unparalleled in British history for probably 200 years." (06:25)
  • "We've got a very difficult planning system. It's very hard to build stuff here... incredibly complicated tax system." (08:11)

• Brian Kurzmack:

  • "Iran can talk about the closure of the strait... just the talk about... sends insurance prices through the roof." (17:53)
  • "[Shipping spot rates] are up 40% since the start of the Strait of Hormuz closing. I mean that literally filters into everything." (25:25)

• Ed Elson:

  • "Tariffs are America's Brexit... The UK is a warning to the rest of the world. It's a case study in how not to run a modern economy." (28:55)

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Key Takeaways

• Britain’s enduring economic stagnation is rooted in policy missteps, especially after Brexit, weak productivity growth, and chronic political turmoil.
• Voter dissatisfaction, a cost-of-living crisis, and institutional barriers have all contributed to rapid PM turnover and policy instability.
• There is a clear divide between technocratic solutions and political feasibility: policies for growth are deeply unpopular among the electorate.
• The Strait of Hormuz crisis highlights how geopolitical uncertainty can raise the global price floor for oil, feed inflation, and impact broader financial markets.
• Brexit stands as a cautionary tale against protectionism, with the host warning similar outcomes are possible for the US if it pursues tariff-heavy policies.

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This episode is a pointed, analytical dissection of UK decline and global market volatility, interspersed with accessible explanations and candid, sometimes acerbic, commentary from hosts and guests.

Transcript

[Prof G]

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[Ed Elson]

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[Paul Johnson]

We've all been there. You pop into the shop for five minutes and all of a sudden you've forgotten where you parked.

[Brian Kurzmack]

Car.

[Prof G]

Car.

[Paul Johnson]

Unfortunately, that lost feeling is what it's like trying to manage your policy with other insurers here.

[Prof G]

Car.

[Paul Johnson]

Come out, come out, wherever you are.

[Brian Kurzmack]

Please.

[Paul Johnson]

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[Brian Kurzmack]

Did this parking lot have a waterfall?

[Paul Johnson]

I think you've wandered too far, mate.

[Brian Kurzmack]

It feels good to find what you're looking for. It feels good to Geico. Money markets Madness.

[Ed Elson]

If money is evil, then that building is hell. Welcome to profit markets. I'm Ed elson. It is June 23rd. Let's check in on yesterday's market vitals. The S&P 500 and the NASDAQ fell as tech giants declined. Google shares fell 5% after two top AI researchers left the company for rivals. Meanwhile, SpaceX stock dropped 16% for its third straight day of losses, dropping to its lowest price since its IPO day. Meanwhile, the Dow rose on hopes for negotiations with Iran. The Russell 2000 closed above 3000 for the first time ever. Oil fell and finally, treasury yields climbed. Okay, what else is happening? The UK is about to Get a new prime minister. Keir Starmer announced he will step down after losing the confidence of his own party. Andy Burnham, former mayor of Manchester, has emerged as his most likely successor and could assume the post by mid July. Prime Minister Starmer's resignation comes almost 10 years after Britain's vote to leave the EU. A decade on the promise of faster growth has yet to materialize. And the UK Economy continues to struggle with sluggish productivity and a cost of living crisis. So what exactly went wrong for the UK economy? And how is it that the country is on its seventh prime minister in the span of 10 years? Well, joining us to discuss this, we're speaking with PA Johnson, economist and provost of the Queen's College at Oxford. Paul, thank you so much for joining us on Profit Markets. Just to refresh our memories here, it was roughly two years ago that Keir Starmer, the leader of the Labour Party, won this election to become Prime Minister. And he won in a landslide against, of course, the backdrop of many, many years of Conservative leadership. And now he's stepping down. It feels like almost yesterday that we talked about him getting the position. So I guess the first question that I'd love to know the answer to, what has gone wrong?

[Paul Johnson]

The Labour Party won an enormous majority, having been out of office for 14 years and actually in 2019, looking like they might be out of office for another 14 years. So it was an amazing turnaround. It was a big, big victory a couple of years ago, but the Prime Minister lost. Keir Starmer lost popularity very quickly, partly because the manifesto on which he ran didn't really reflect the decisions he was going to take as soon as he got into office. So he started doing what some of us would argue were quite sensible things like small reductions in some of the benefits that pensioners, people over state pension age received. There's some very big tax rises that were introduced, despite the fact his manifesto said that he wouldn't introduce big tax rises. And then there have been a series of missteps around personnel. Peter Mandelson turned out to have unhealthily close connections with Jeffrey Epstein. There have been a series of other issues with the Prime Minister's judgment, but he's become incredibly unpopular, probably more unpopular than it's easy to explain. He's a decent, hard working, honorable man, but has really failed to connect with the electorate.

[Ed Elson]

Just looking at previous prime ministers, I mean, we saw that when Rishi Sunak was coming to the end of his time, he was pretty unpopular too, or at least the Conservative Party was very Unpopular. You had Liz Truss, which was obviously something as close to a disaster as you could get. At least I think that is sort of how she is remembered at this point. You had a lot of resentment towards Boris Johnson, especially coming out of COVID and all of his antics there. I mean, when I look at the uk, and I live in the US now, and I have done for some time, it seems as though every single leader is botching it in some way. And I start to wonder if this is because these leaders are actually unqualified or not doing the right job, or if it's something more systemic. And coming off of the 10 year anniversary of Brexit, I wonder if these issues that are ailing the country maybe can't be solved in just one term from a Prime Minister.

[Paul Johnson]

You're right. I mean, it's been a combination of the two, I think. We've not had the world's greatest leaders, I think it would be fair to say over the last 10 years, but they've also inherited a really, really difficult situation. The first couple trips up over Brexit and how to actually achieve that, then we had absolute chaos, as you say, with Liz Truss. Part of the problem here is that between elections, the leaders of the Prime Ministers are effectively elected by a very small number of people in their own political party. And we got some slightly strange outcome, I think it's fair to say, with Liz Truss. But I think the overall story here is Prime Ministers are unpopular because people are not feeling well off. We've had now actually nearly two decades of really, really poor economic growth. Average earnings today are pretty much the same as they were 20 years ago. Now that is really unparalleled in British history for probably 200 years. And that's why people now talk about a cost of living crisis. Inflation in the UK has been higher than it's been in most other developed economies for quite a long time. And the result is essentially the electorate is really pretty fed up. Now, with a fed up electorate, we're getting fairly chaotic politics. But of course chaotic politics makes it difficult to produce the stable policies and the growth that might get you out of that spiral. So you get a fed up electorate, you get chaotic politics, you get less growth and you get an even more fed up electorate. And I think that's the horrible spiral we're in at the moment.

[Ed Elson]

What would you say are the biggest problems ailing the UK's economy at this point?

[Paul Johnson]

One sense it is that lack of growth. We've had very little in the way of productivity growth. For a very long time. Now the question is why that? Well, partly we were particularly badly affected by the financial crisis. We've got a very big financial sector, particularly in London, partly Brexit and the uncertainty that happened after 2016. There's a general acceptance of that. Cut a few percentage points off growth, but I think a combination of that with some pretty poor policy choices. We've got a very difficult planning system. It's very hard to build stuff here. There are certainly elements of our education system that could be better. Incredibly complicated tax system which is definitely creating problems for growth. It's worth saying many European countries are struggling. We're just struggling more than most of the rest.

[Ed Elson]

Just looking ahead, it appears that the next Prime Minister, if he isn't challenged, will be Andy Burnham. Odds of him being appointed as prime minister before July 18 are up to 55% on Kalshi and up to 84% before August. What do we know about this guy Andy Burnham and what are perhaps his plans or what might he try to do in order to get the country out of what appears to be something of an economic mess?

[Paul Johnson]

The straightforward answer is we don't know. And it's quite remarkable that it looks like, I mean, he's almost definitely going to become Prime Minister very quickly because Labour politicians are essentially, it looks like they're all going to back him, but they're backing him off the back of a sort of a general sense, I think, that he's a better politician than Keir Starmer and a general sense that he might be a little bit more left wing because the Labour Party is probably a little bit to the left of what Keir Starmer has been doing, what he would actually do. He said very little. There's a bit of a joke, to be honest, over here, which is that he's changed his views a lot over the last 30 years. He's been in politics for a long time and he's sort of moved from sort of the Blairite, sort of New labor, sort of quite moderate labour of the 2000s. He went quite a long way left in the 2000s. He's painted himself a picture as an independent mayor up in Manchester. He calls it a form of business friendly socialism. How that is likely to play out on the national stage, we don't know. He's toyed with greater public control of some industries, but we don't know what that means. Highly unlikely to be full scale nationalization. He's gone back and forwards on what he thinks he might want to do to higher levels of taxes and so on, and also back and forwards a bit on whether he's going to borrow more. So the only honest answer I can give you is I don't know what his economic policy is going to be, except that I think his instincts are somewhere to the left of the current government.

[Ed Elson]

Is there any consensus at this point on what the policy should be going forward? I mean, you mentioned that he is more left leaning. Maybe that would mean more government spending, although we know that the debt levels in the UK have gotten kind of crazy in recent years. Or maybe there's a shift in the other direction. I mean, what is the economic path ahead for the uk? Does anyone agree?

[Paul Johnson]

It depends on consensus. Among whom. I think there's a little bit of a consensus among technocrats, but we technocrats tend to have solutions that politicians find rather difficult to implement. So tax reform is quite difficult when your people aren't getting better off because that will mean some people are left worse off by reforming the tax system. Making it much easier to build things is quite unpopular with people who live near the places that the roads or what have you are going to get built. Spending more on investment, if that means spending less on welfare, for example, is also unpopular in the short term. So I think among technocrats there are some pretty well worn ideas about what you need to get growth. But politicians for a long time have shied away from doing those things because they appear to be electorally unpopular.

[Ed Elson]

All right. Paul Johnson is an economist and provost of the Queen's College at Oxford. Paul, we really appreciate your time. Thank you.

[Paul Johnson]

Thank you.

[Ed Elson]

After the break, the Strait of Hormuz remains under pressure. And for even more market insights, you can subscribe to my weekly newsletter, simply put@simply put. Prof.gmedia.com. Support for the show comes from Gusto. Right now everyone is trying to have tighter budgets with smaller teams while still keeping their high expectations. The last thing you should be wasting your time on is manual payroll or chasing down an HR form. Gusto is how small business owners get time back when every hour counts. Gusto is online payroll and benefits software built for small businesses. It's all in one remote, friendly and incredibly easy to use, so you can pay, hire, onboard and support your team from anywhere. If you've been stuck working on repetitive administrative tasks and thought to yourself, there has to be an easier way. That's the kind of thing Gusto was built to solve. They say they can provide automatic payroll tax filing, simple direct deposits, health benefits, commuter benefits, workers comp 401k you name it. Gusto makes it simple and has options for nearly every budget. Save time with built in automated tools, offer letters, onboarding docs, direct deposit and more. With Gusto, you can direct access to certified HR experts to help support you through any tough age HR situation. Try gusto [e-mail] markets and get three months free when you run your first payroll. That's three months of free [e-mail] markets one more time gusto.com markets support for

[Prof G]

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[Ed Elson]

When I scraped my car in that parking garage, I was worried that it could be a long process to take care of it. Like a landscaper's first day trimming a hedge.

[Brian Kurzmack]

Mate, I have definitely already been here. Now was it left right or right left?

[Prof G]

Well, maybe I'll cut a path out

[Brian Kurzmack]

and find my way back later.

[Ed Elson]

But it wasn't like that. I filed a claim in under two minutes on the Geico app and they handled it from there. It was taken care of almost as quickly as it happened.

[Brian Kurzmack]

It feels good to get help quick.

[Paul Johnson]

It feels good to Geico

[Brian Kurzmack]

Foreign.

[Ed Elson]

We're back with Profge Markets. It's now been six days since the US and Iran signed a memorandum of understanding to end the war, but not much has changed. Traffic in the Strait is stalled and oil still hasn't left Iran. Representatives from both countries met in Switzerland yesterday to discuss a few key issues. Those included a ceasefire between Israel and Lebanon and and ship traffic through the Strait of Hormuz. In the meantime, the US Treasury Department granted Iran a 60 day license to sell oil in US dollars for the first time in over a decade. In exchange, JD Vance says Iran has agreed to allow UN Nuclear inspectors back into the country. Despite these talks, investors still have a lot of questions that are yet to be answered. Namely, when will the strait truly be open to tell us how the market really views this deal, we're speaking with Brian Kurzmack, Portfolio manager at GQG Partners. So Brian, thanks for joining us on the show. The US And Iran signed this memorandum of understanding last week. We all kind of thought maybe the war is over at this point, maybe the Strait of Hormuz will open. And then over the weekend Iran says the strait is actually closed. Then the US doesn't really acknowledge that. Then there's some confusion. Now I guess it's open again, but not really. I mean, from your seat, what is the status on the Strait of Hormuz? Can we say it's open or closed?

[Brian Kurzmack]

We were actually fairly constructive on energy even before any of this started. And one of our thoughts were that we came into this year expecting that there would be a little bit of a supply glut in energy and crude oil specifically. It was our view that a lot of the consolidated base of the energy companies globally, especially the swing producers in the US US Were actually slowing things down in terms of you saw rig counts coming down, you saw people sort of adjusting for that oversupply that was supposed to happen this year into next year. And you had some really high quality operators are going to put up extremely strong earnings even at a dollar sixty a barrel sort of price tag. What you can definitively say is even if the straight magically opened tomorrow, we did get everything logistically firing back on all cylinders, so to speak. You're seeing a situation where it's probably an $80 plus a lot is gone. So even now when you kind of look back at the companies that you're talking about, like an Exxon, for example, that even if the price of oil stays at $65 a barrel, they're going to be able to do almost 20% total return, 13% in terms of EPS growth in terms of a cake over the next couple of years, that looks really attractive either way. To get to your question more directly though, in terms of the straight being open or not, I think One of the things that we have seen come out of this is that, you know, Iran can talk about the closure of the strait, and there's almost this asymmetric impact of having that information because just the talk about, you know, closing the straight back down sends insurance prices through the roof. It talks about, you know, the shipping slowing down and folks not necessarily wanting to send freighters back into the strait, regardless of how many you're getting out at this point in time. So there's a lot of logistical challenges. And I think ostensibly you could talk about supply being constrained for a bit longer than what we're sort of expecting where the market is priced in.

[Ed Elson]

Yeah, the insurance point is an interesting one. And this to me is something that, I mean, markets appear to have been relatively optimistic about this entire situation, but it seems as though there is now increased uncertainty whether or not the strait is open or closed, that it might be closed in the future or that it might be closed tomorrow or the next week, or that there might be a missile that is fired at a vessel nearby. I mean, the level of risk and the level of confusion and uncertainty around the strait seems to me to be now more elevated, which would make me think that the floor on the price of oil has just fundamentally been raised. I'd be interested to hear if that is your view, and if so, what does that mean for asset prices beyond oil? What does that mean potentially for inflation in the US and how could that affect the markets at large?

[Brian Kurzmack]

Yeah, what I think is the case at this point is that you probably do have a higher floor. So number one, you took out that supply glide that we were talking about, and then the price of that oil permanently should be a little bit higher. There should be some level of risk premium, so to speak, that you have to sort of compensate for, for getting that oil out of the Persian Gulf. A lot of the energy companies, for example, that we talk to when they go to contract ships, they're not necessarily sending ships in anytime soon. They're going to wait several months to wait to see if there's more clarity in terms of that. Maersk themselves talked about not necessarily changing their plans and sending ships back in. So there's a delay, there is a lag, and I think it'll be a long time before there is a true return to normalcy. So then the next question is, well, why is oil sitting at the price that it is right now? I think that's a really interesting one because with everything that's going on, you would expect you're taking almost A fifth of the world's energy out of capacity, so to speak, and locked in the straight that energy prices should be substantially higher. Yet here we are sitting in the 70s, almost $80 a barrel in terms of. And what I think you're seeing is two things. Number one, you've offset a decent amount of that supply or that lack of supply through inventory draw. It's been well publicized. But what's interesting is even last week we had a 17 million barrel draw off of both US inventories and the SPR. So you're getting sort of subsidized barrels, so to speak, that are working their way through the system. I was on top of, I believe it was 16 million barrels the week before, maybe 15 the week before that. So you're seeing this consistently coming through this level in magnitude that's offsetting whatever you would have gotten out of the straight in that sense. You've also seen China tap the brakes a little bit. They have massive oil reserves on their side, so they've slowed down in their imports and they've drawn down their own finished products inventory. So I think that's causing that price to be a little bit lower. That combined with the fact that the shipping costs of going out there and sending this stuff through is so expensive that everybody's just kind of sitting on their hands and they're saying, okay, everybody keeps telling me this thing is going to be over in the next six weeks, next eight weeks, another month or two. So I'm going to wait for the price to be a little bit lower so I can go and refill those inventories and I'm just going to wait and draw them down in the meantime. It's kind of like that transitory argument and, or the variable mortgage rate argument that people used to have in the day, where I'm going to take the mortgage at the lower price now, even though it's variable, because I believe the rate's going to go down later. Well, that works unless it happens. So what if the straight actually is prolonged in terms of being closed or being constrained? Then you have to start buying these barrels at a higher price. And that's when you start seeing the physical prices coming back up when that inventory sort of hits those bottoms. And I think that thing that concerns us a little bit is when you start looking at those data. Cushing, for example, Cushing, Oklahoma, you're at essentially effective tank bottoms there, about 20 million barrels. You get any lower, you start getting rust and like the sludge and stuff in the bottom of the barrel coming through, so it's not really that usable below that level. You think about us gasoline inventories, I think we're at 214 million barrels right now. From what we've heard and seen, it's about 195 to 215 that you start hitting that operational minimum, meaning that you get any less fuel in the tanks, then you start having those gas pumps with the plastic over them and any sort of disruption causes that to happen. So we're at pretty low levels right now. And Trump even said this, he said we'd be out of energy, be in a really bad situation in the next four weeks if things didn't clarify themselves. So I think that's why you're seeing the negotiations as hard as you're seeing happening and the concessions that are being made happening within the Iranian situation.

[Ed Elson]

Yeah. In other words, the price that we're seeing, which is, to be clear, elevated, but not as elevated as you might think, is largely because there are expectations among investors that soon enough they'll come down. So why would I pay a high price right now? Because the expectation is that this will be over, which is optimistic. That's a level of expectation. That's a level of optimism that may or may not last, depending on what happens in these negotiations over the next few weeks. Just, I mean, to play this out, let's say the optimism fades. Let's say people decide, you know what, we haven't made real progress on this deal. We keep on hearing about a deal, this one was supposed to be like the real one. And then if for whatever reason it turns out to not be the real one, and I think you can make an argument that it isn't. But if, for whatever reason that happens, then suddenly we're dealing with another issue where the price could go up even higher. I'd be curious to get your views on inflation and as a result, interest rates, because this seems to be the thing that most investors are divided on. Will interest rates rise within the year or will they not? It seems to be a coin flip at this point.

[Brian Kurzmack]

Yeah. So I think one of the things that you can see already in terms of the higher fuel input costs, energy costs that we've seen up until this point is it is starting to have an impact on things. Now, it may be somewhat muted because we've only gone through one earnings cycle and you only had a partial impact impact of this stuff up until this point. But you look at some of the retailers that have come out, the Walmarts, the Costco's, even the, you know, the, the dollar stores and things like that. They've all talked about the fact that consumers are facing, you know, sharper sort of pricing and they're having to try to, you know, absorb some of that pricing on their behalf. Now they particularly get a benefit because consumers trade down to quote unquote, inferior goods. They're going away from the more expensive place to shop and going there instead. So that's helping, but in the grand scheme of things that is sort of hurting that purchasing power, so to speak. You hear this with some of the industrial players and they're saying that they're going to have to start incorporating some of these higher transportation costs, diesel costs and things like that on a longer term basis over the next couple of quarters if this doesn't rectify itself. You even talk to the shipping companies. Maersk for example, said that shipping spot rates are up 40% since the start of the Schrodermos closing. I mean that literally filters into everything that we look at in terms of a global economy. So I would argue that that does have upward pressure on inflation. You saw that in the PPI data, which was incredibly strong from a May standpoint. You're talking almost double digits from that standpoint. And that was on goods and services. So it's not just isolated to one spot. So I think this is actually starting to come through and I think what you're hearing from the markets is generally people are getting out of this mode of okay, we need Fed cuts because the economy is maybe struggling. Economy seems to be doing okay despite all of this. But you are hearing, is that okay, we've missed inflation for so long and here, as Warshead said more recently, they have very singular focus now on price stability. He made it very clear in terms of the comments that he had there. So if that's becoming more of a focus, how is that going to impact things? And I think that has large implications especially in a market that is so one sided and lopsided on tech right now. And tech is generally extremely sensitive to interest rates in terms of the longer term valuation trends. But, but also they're going through massive debt raising at this point in time too. So that's going to be much more expensive for all this capital build up.

[Ed Elson]

Yeah, really, really interesting stuff. It seems like that's going to be sort of the decider for 2026 what happens with interest rates and we'll see. Brian Kurzmag is portfolio manager at GQG Partners. Brian, we really appreciate your time. Thank you.

[Brian Kurzmack]

Thanks so much. Having Me.

[Ed Elson]

Let's wrap up this episode where we began. Another year, another prime minister for the UK. Britain will soon have its seventh prime minister in 10 years. One of the highest turnover rates in the world and the highest for the nation in nearly 200 years. And it's fitting that it should happen now, on the 10 year anniversary of that fateful vote that led the UK to where it is today. I'm talking, of course, about Brexit. Ten years ago today, the people of Britain were faced with a choice. Either stay in the EU and maintain the free trade relationships that incentivize commerce and productivity, or leave, making trade more expensive and growth more difficult. In the name of Britannia, the UK voted to leave. Sure, it would be complicated, but in the eyes of the voters, they were better off on their own. How wrong they turned out to be. Ten years on, almost 60% of Britain say they shouldn't have left the EU. Meanwhile, GDP per capita is as much as 8% lower than it would have been without Brexit, and business investment is as much as 18% lower. Now, why am I talking about all of this? Well, for one, I grew up in the UK so I care about their issues. But more importantly, the same decision that ruined the UK economy, that destroyed the nation's politics for possibly decades to come. That same dilemma is now playing out in America. More specifically, the dilemma of tariffs or no tariffs. And while the technical details are different from Brexit, the thrust of that policy is the same. Put up the barriers, reduce international trade, and do it all in the name of national pride. I've said it before and I'll say it again. Tariffs are America's Brexit. The preconditions were the same, the arguments are the same, and now we will see what the outcome will be. My guess is that it will be the same. The UK is a warning to the rest of the world. It's a case study in how not to run a modern economy. We don't need think tanks and we don't need white papers. We know how this goes. We know how it ends. All we have to do is look. Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalon, Isabella Kinsel, Kristin o' Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thanks for listening to Profty Markets from Proffty Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will See you tomorrow. When I got a new car, I thought my insurance premium would increase and empty my bank account. Like if fatween won the lottery. I've invested most of my winnings in chicken tenders because they're bomb. But bro, I bought a house and it's sick, bro. I'm thinking the floor is gonna be all trampoline.

[Brian Kurzmack]

Bro.

[Ed Elson]

With the helipad on the roof, the contractor said it's structurally unsafe. Down.

[Paul Johnson]

They're just being babies.

[Brian Kurzmack]

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