I’m always amused by the way people give credit for Britain’s economic fortunes exclusively to British governments, as if Britain were an economic as well as a geographical island, totally unconnected to the rest of the world.
Opprobrium was heaped on the Labour government for the recession starting in 2009 — even though it was a worldwide phenomenon originating in North America, and despite Labour’s economic performance having been one of the best in decades up to that point.
Five years later, we’re doing a bit better [FT blog: free registration required]. Again, commentators are attributing this to the government of the day. But amazingly (!), most of our European neighbours, and indeed much of the rest of the world, are doing a bit better too!
What about Osborne’s claims that Britain’s economic output has now reached the level of 2007? Well, far from being a great achievement of the coalition, it’s actually something of an embarrassment that it’s taken longer for us to reach this point than many other countries, longer than it was on course for when Labour left office, and longer than the Conservative-led government had announced as its target. Worse still, according to the usual yardstick of GDP per capita, Osborne’s claim isn’t even really true. The economy is doing better, but people are still worse off.
This detailed analysis from the Wall Street Journal is instructive:
[It] is worth remembering that most of the UK’s peers regained their pre-crisis scale many quarters ago, and that the UK has enjoyed much stronger population growth since the crisis hit, adding some 2.7 million people in the years between 2008 and 2014.
What that means is that output per capita is still some way below its pre-crisis level, and the UK’s performance by this metric does not compare well with most other developed economies.
Some figures provided by the European Union’s statistics agency illustrate the damage suffered by the U.K. economy in recent years, adjusting output for population increase. The figures run to the end of last year, but even six months of strong growth won’t have changed them much.
Between 2008 and 2013, UK GDP per capita measured in purchasing power standards — and so adjusting for differences in price levels — fell from 114% of the EU average to 106%, a relative decline of eight percentage points.
For the crisis-stricken euro zone, the decline was from 109% to 108%, or one point.