Where Did It All Go Wrong?

I haven't written much about the economy of late, because it seems to me that whilst some things can be said with confidence, no one fully understands what is going on and most punditry in the subject is worthless, including mine.

Still the news that the IMF have declared that in a shitty global economy Britain is the absolutely worst positioned country in the world to get through it is shocking.

Back in the late 1990s we had one of the healthiest economies in the developed world. So how have we* managed to screw it up so spectacularly?

Gordon Brown's massive accumulation of debt in order to increase public spending is one reason. This was done for political ends because a Chancellor who had to reform public services would struggle to win a Labour leadership contest. The house price bubble is another reason, this was also done for political purposes because when people feel that they are getting richer they are more content. A third reason must be due to the importance of our financial services industry, this isn't the government's fault as it has always been an important sector in the UK.

Any other reasons?

* I say 'we' not 'they' because the the public put the government in power.