Argentina was once one of the wealthiest countries in the world, creating the common phrase ‘rich as an Argentine’, until state control of industries and runaway public spending turned prosperity into a breakdown. The UK is now following a similar pattern, but with Javier Milei shrinking the size of the government, there are key lessons that the UK can learn from Argentina.
During the late 19th century, Argentina boasted one of the world’s strongest economies, fuelled by the countries rich natural resources, a booming agricultural sector and stable currency. Following the Prebisch-singer hypothesis, over-reliance on their agricultural sector meant the country lagged behind other nations who were developing their secondary industries. Hence, prosperity did not continue after World War II, with the country struggling to get back to its former glory. Prosperity did not last after World War II, with the country struggling to get back to its former glory.
Juan Domingo Peron, the President between 1946-73, sought to resolve Argentina’s economic problem by developing an expansive public sector with a heavily regulated economy, implementing the ideals of protectionism and paternalistic socialism. Decades of this attitude towards government spending paved way for workers’ rights, but also contributed to the country’s extreme hyperinflation, which peaked recently in 2024 at 292.2%.
Argentina’s fall from riches serves as a cautionary tale, driven by an unsustainable expansion of the public sector and resistance to globalisation. Alarmingly, the UK seems to be flirting with similar ideas. This can be seen within Reform UK’s plans to increase the National Insurance Tax to 20% for businesses hiring non-British citizens. The party’s nationalistic rhetoric isn’t just economically ignorant – it’s the first step towards an anti-globalist narrative in the UK. By creating a financial detriment for engaging with global talent, Reform seeks to push businesses towards excluding foreign workers, even if their inclusion could bring added value to a company. While Reform’s rhetoric doesn’t go as far as to call for the outright isolation from global cooperation policies, their message is clearly attempting to evoke protectionist principles.
Labour believes that throwing taxpayer money at failing systems is a suitable substitute for real reform. Despite this funding, the NHS still suffers from serious wait times and a mismanaged structure, the government budgeted an additional £25.7 billion – the largest increase since 2010, excluding COVID-19. But increased funding will not fix the fundamental problems. Without structural reform, this money will vanish into the same complex system that has plagued the NHS for years. Labour is now returning to the era of the 70s, a time of central planning and renationalisation of the railway network. Yet, they forget that during the post-war nationalisation, season tickets and peak time travel prices rose consistently every year, not as a reflection of its value, but to off-set the network’s rising costs. Eliminating market competition and demand for improvement, the vital rail industry could lead to warped pricing and lethargic innovation. While nationalisation of one or two industries may not crash the economy, the fallacy that is nationalisation without hindering the economy is a dangerous one to follow. If Labour continues down this path, the result could be disastrous.
Today, Argentina is experiencing a dramatic course of correction under President Javier Milei. His ‘chainsaw’ mentality towards government waste isn’t just focusing on cut-costs, but also to liberate Argentina from state control. In the past few months, Milei has got rid of restrictive housing policies, reduced overfunded public sectors, and closed wasteful government ministries, all of which has already yielded success: Argentina’s first budget surplus in 12 years. However, these huge structural reforms will not be without its consequences. Universities face restraints with budget cuts and approximately 200,000 construction jobs were lost due to loss of government funding.
However, the alternative would be a continual economic downturn, stagnation and out of control inflation, ultimately prolonging the cost-of-living crisis. The Argentinian public seem to recognise this as Milei’s approval rating has remained steady at 50%, demonstrating the nation’s demand for real change.
Milei’s vision for Argentina faced heavy criticism during the election, with 108 economists from around the world citing risks and downfall if Milei were to take office. Their prediction has not materialised. Within his first six months in office, Milei has been able to curb hyperinflation, as well as reversing Argentina’s long-standing fiscal deficit. His administration’s success underscores a fundamental truth, that disciplined economic policy and market liberalisation remains the most effective route to long-term stability and growth. Britain needs to start following Argentina’s example of deregulation and liberalisation to reignite economic growth.
