U.S. Economic Growth Outpaces U.K. Post-Financial Crisis

A Bit of a Nod to the Americans: Economic Performance Compared

Deconstructing Economic Growth

Ah, well, dear readers, let’s dive straight into this rather enlightening analysis. It’s no secret that the British have traditionally cast a discerning eye on American politics. Nonetheless, one cannot ignore how the United States has economically outstripped the UK in recent years. Between the leadership of several American presidents ‒ notably Donald Trump, Joe Biden, Barack Obama, and George W Bush ‒ the US has made notable strides all the while we’ve unfortunately lagged behind.

Income Per Capita: A Stark Contrast

The numbers speak volumes. Since the notorious financial crash of 2007, income per head in the United States has soared by 72%. In stark contrast, the UK has witnessed a 2% decline in dollar terms during the same period. Imagine that. In 2007, Britain’s income per head was higher, but now the US boasts a GDP per capita of $82,800 (£65,767) compared to our humble $49,500. This calls for a moment of introspection, one might say.

The Fast Food Salary Divide

Allow me to illustrate the income contrast with a rather mundane example. Consider the salaries offered for managing a McDonald’s. In Britain, one would earn around £32,649 ($41,074). However, across the pond, our American counterparts pocket a sum of $55,300. Consequently, an American manager can afford roughly 809 Big Macs per month, whereas a Brit could indulge in just 647.

Stock Market Dynamics

America’s technology behemoths, like Google and Apple, have capitalised well on the digital boom. Their prowess has driven US stock markets forward significantly. The S&P 500 index, monitoring the most prominent 500 companies, surged by 306% from 2007 to 2024’s conclusion. Meanwhile, back home, the FTSE 100 has languished with a more than 20% drop in dollar terms. For further insights into Britain’s financial struggles, consider reviewing Britain’s performance related articles.

Global Comparisons

The global perspective offers a slightly doleful note, with average international incomes rising from $8,700 to $13,200, rendering the UK’s GDP only 3.75 times higher than the average, down from almost six times pre-2007. Remarkably, global stock indices, particularly the MSCI world index, achieved a 134% growth in the same timeframe, outpacing our economic strides.

Economic Influences: Value of the Pound and Beyond

It seems quite evident that the unfortunate plummet in the pound’s value ‒ dropping over 33% against the dollar in the past 17 years ‒ has widened the wealth gap. However, it’s imperative to mention that this is not the sole factor at play. The Adam Smith Institute’s Maxwell Marlow highlights Britain’s challenges: lacklustre capital investment, planning mishaps, infrastructure shortcomings, and an oppressive tax load have all hindered our economic vitality.

Productivity and Investment

Others attribute the lacklustre economic performance to poor productivity growth. Historically, productivity doubled over 35 years before 2008, yet post-2008, it has seen a meagre 5% increase. According to the Institute for Fiscal Studies’ Nick Ridpath, lower investment in the UK compared to our French and German neighbours since the Great Recession is a substantial culprit. Businesses and the government have found themselves in a financial pinch, curbing investments.

The Brexit Factor

Lastly, we bring up the topic of Brexit, which, you’ll understand, is always a touchy subject. As Ridpath notes, our departure from the EU has somewhat burdened the UK’s economy. Trade barriers now inflate the cost of selling goods to our prime trading partner. As a result, this has adversely impacted Britain’s export figures.

In conclusion, while our dear nation has been living through a series of challenging fiscal chapters, understanding the various factors at play is crucial if we are to chart a path towards economic resurgence. As always, we welcome your thoughts and debates in the classic British style: over a good cuppa.