Nothing works anymore, the country is in a mess, worker’s living standards have remained stagnant, public services are at breaking point. Such statements are now commonplace, and are increasingly brought together in articles like this one by Sam Knight in the New Yorker. But is all this the result of 14 years of bad government, or can the blame be laid at the door of one or two specific events like austerity or Brexit?
Economic decline
I want to start with a post I wrote two years ago, where I was already talking about an unprecedented era of UK macroeconomic decline. I focused on comparisons with the US, and here is an updated chart of GDP per head in the two countries.
The divergence between the two countries has grown steadily since around 2010, it has become particularly dramatic since the pandemic. While real GDP per head in the UK has increased by only around 5% over the last 15 years, in the US it has increased by over 20%. As that earlier post showed, this divergence was not a feature of the previous three decades, but instead started around 2010. Between 1980 and 2010 UK GDP per head grew at least as fast as the US.
Comparisons with Europe are less dramatic, but partly for that reason may be more instructive.
If we compare the UK to the EU average (blue and green), the EU recovered more rapidly from the Global Financial Crisis (GFC) recession, but then fell back as the second Eurozone recession began to bite. However from 2016 onwards EU growth exceeded growth in the UK, leaving an 8% gap by 2023. A difference in growth of 8% over less than a decade is a
