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European Union

The Brexit Blame Game: A Critical Examination of GDP Performance

Strategic Insights

— 2 min read

The narrative that the UK has significantly underperformed the euro area since 2016, with GDP per head growing nearly three times slower, has become a staple of Europhile commentary. However, a closer examination of international data reveals that this oversimplifies the issue and ignores the diverse performances of other G7 economies. By comparing the UK's performance with individual countries and the broader G7 group, a more nuanced picture emerges, highlighting the limitations of using GDP per head as a measure of underlying economic performance.

Key Takeaways:

  • The UK's GDP per head growth since 2016 (4%) has been lower than the period between 2000 and 2016 (17%), but not unique among the G7 economies.
  • The US has maintained consistently strong growth in GDP per head across the two periods, with a total growth of 28% since 2016 and 34% between 2000 and 2016.
  • The exceptional US performance has been influenced by factors not easily replicable elsewhere, including large budget deficits underpinned by strong international appetite for dollar assets.
  • Italy has recorded the second-highest growth in GDP per head in the G7 behind the US, but its recent performance must be viewed in context, as the Italian economy barely grew at all during the first decade after adopting the euro in 1999.
  • France has also outperformed the UK since 2016, with its GDP per head growth, but its public finances are in an even worse state than those in the UK.
  • Germany's GDP per head growth since 2016 has been significantly lower than the period between 2000 and 2016, and common factors between the UK and Germany include policy choices regarding non-EU migration.
  • Canada's GDP per head growth since 2016 has been slightly lower than the UK, and the country has experienced the highest population growth in the G7 over this period, driven by successive governments' encouragement of immigration to address labour shortages.

Statistics:

  • GDP per head growth in the UK since 2016 (4%):
  • GDP per head growth in the US between 2000 and 2016 (34%):
  • IMF research on EU internal barriers and regulations as a tariff equivalent: 44pc for manufacturing, 110pc for services.
  • UK population growth driven by net migration (Recent): https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/populationestimatesforukenglandandwalesandukcountries

Sources:

  • OECD: Internationally comparable data on GDP per head growth (https://data.oecd.org/national/gdp-per-capita.htm)
  • IMF: Research on EU internal barriers and regulations (44pc for manufacturing, 110pc for services)
  • Julian Jessop's Twitter profile (@julianhjessop)

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