Was thinking something similar. I don't think it was any one thing but a combination of things - some unfortunate - some bad decisions on his part. He definitely turned worse in the 2000s when he started having trouble getting record deals. Also realizing he was not going to have the same success he had with The Smiths and even his own early solo career. Seems like he started to live even more in his own bubble from then on.
This is what I think and I am probably wrong, but here goes anyway:
Morrissey's nature is to be pessimistic and negative and to suffer from a persecution complex. He is socially awkward and when he makes a real friend he is intensely jealous of any relationships they have (e.g. Johnny Marr). He is and has been rich for a very long time, but remembers the days when he had nothing. This could explain why he never seems to want to pay anyone for anything.
His father left them when he was still fairly young, and from his autobiography it sounds like he grew up under a matriarchy. I suspect his father was a 'man's man' and probably didn't have much time for the sensitive and sometimes effeminate Morrissey (that's a guess and probably an unforgivably ignorant one).
The MOST damaging thing to Morrissey has been the flock of useless 'yes' men who surround him, treating him like a God. The second most damaging thing is the braindead loser fans who think he walks on water and would throw themselves under a bus to get his attention. The kind of mindless meatheads who bleat 'You saved my life' when they see him.
In an interview years ago Morrissey said how he felt sorry for ordinary people who have to wait in a car for an hour outside the shops while their partner were shopping. I honestly believe that Morrissey would have been happier with less success and a stable relationship (e.g. Jake). His life of flitting between one luxury hotel and another no longer suits him. His constant touring in recent years is something a 30 year old could barely handle, never mind a 56 year old. His lonely lifestyle has made him selfish, to the point that he openly declares on national TV that he doesn't care about people who have no jobs and whose families are barely surviving (BBC One Show).
He admits that he has been far more successful than he could ever have imagined, and yet he craves for a record deal even though he could self-release if he wanted to. He thinks most other music is crap apart from his own.
He only has sympathy for animals. These are the symptoms of someone who has no empathy with the human race and for all intents and purposes has gladly disconnected from human society.
He hurts anyone who tries to get near to him. This type of Pyrrhic victory only works on paper.
He insults every single record company he has worked with, and some producers, and has been sued by countless people for not paying them their due earnings (as they see it). And then complains when a record company won't touch him with a barge pole. To be dropped by a record label months after a release is a joke and shouldn't have happened.
The die is cast. The year 2016 won't change anyone here.