Andrew Sentance, who was a member of the Bank of England’s (BoE) interest-rate setting committee in 2006-2011, this week posted on Twitter the first chart here, showing that in the period 1972-2017, average GDP per capita of the G7 (Group of Seven industrialised nations) was highest in Japan, followed by the United Kingdom, the United States and Germany, Canada, France and Italy.
Based on World Bank data for 1972-2017, I calculated that Japan’s real GDP per head was 231% bigger in 2017 with Germany (German reunification occurred in 1990 and that may explain different rankings between the sets of data) and the UK effectively tied at 223% and 222%. Canada was at 196% and the US at 190%.
The economist said EU GDP per head has grown faster than the UK and US since 2000 (see the second chart). “So it is not true that the European Union has seriously underperformed over the past two decades. It has been one of the better performing economic entities for growth in the Western World.”
Sentance is opposed to Brexit but also this week, he criticised the gloomy BoE scenario for a no-deal Brexit.
John Redwood, the über-Brexiteer Tory MP, argued this week that
“As UK GDP data begins in 1948 I have now confirmed that between 1948 and 1972* when we joined the EC, growth amounted to 118%.
In the years from 1993 to 2017, following completion of the single market, growth was just 69%.
In other words, growth inside the EU was 41% lower than before we joined. So using the Treasury way of explaining these things, at today’s values the UK economy would be far better off in income and output terms than we are following time in the EU. They should adopt their own negative language and tell us just what a colossal loss of income and output this amounts to.”
*The UK joined with Ireland and Denmark on January 1, 1973.
However, the honourable gentleman is being economical with the truth!
Greece and Italy were the star economic performers in Europe in the period 1950-1973 and according to the World Bank, Europe’s growth from the first few years of postwar reconstruction until the oil crisis of 1974 was its fastest ever recorded.
Tariff barriers were reduced from the 1950s in both the US and Europe, promoting rising trade.
Real annual GDP per capita rose over 3.5% in Western and Eastern Europe and 4.5% in Southern Europe during this period. The average growth rate for all of Europe had not exceeded 1.5% in the previous 130 years according to the World Bank and this economic surge came after four decades of subtrend growth below 1% caused by destruction in 1914-18 and later depression. See here
The world's 10 largest economies in 2019-2020.
Here are the top 10 projected economies in terms of GDP per capita in 2018 according to the FocusEconomics Consensus Forecast:
|
Luxembourg |
USD 117,535 |
|
Norway |
USD 84,783 |
|
Switzerland |
USD 84,698 |
|
Ireland |
USD 79,773 |
|
Iceland |
USD 78,032 |
|
United States |
USD 65,133 |
|
Qatar |
USD 64,789 |
|
Denmark |
USD 62,204 |
|
Singapore |
USD 62,005 |
|
Australia |
USD 57,171 |
Data for Luxembourg (about 40% of its workforce live beyond its borders), and Ireland (GDP massively distorted by corporate tax avoidance), should be ignored.
Related
Similar economic structures fuel Ireland’s high Brexit risk
