Comparative recovery

The UK will grow faster in 2014 than any of the other major economies, the International Monetary Fund said last week. It gave George Osborne something to crow about and the chance to have a dig at the IMF for its previous pessimism about Britain’s economy.

Of course, a bit of growth at last is to be welcomed even if, by previous standards, it is still very weak. How far does this ‘best performing economy in the G7’ claim stack up though?

Fortunately, the IMF published its World Economic Outlook last week, so we have some up-to-date figures against which to compare the UK with other major economies. As a bit of fun, I’ve added Greece in too, for reasons which will become clear.


Source: IMF World Economic Outlook

All the economies took a dive in 2007-08 but many of them have already recovered their lost GDP. The UK is forecast to get back to its pre-recession GDP in 2014, one year later than Japan, three years later than France, Germany and the US and four years later than Canada.

The projections for per capita GDP are even less flattering. Granted, Britain’s population has risen faster than that of some other countries but, according to the IMF, our GDP per person will not get back to its pre-recession level until 2017. That’s one year after France, four years after Japan and the US, five years after Canada and six years after Germany. No wonder people say they are not feeling the recovery.

GDP Per Capita IMF


Source: IMF World Economic Outlook

It could be worse though. Under these scenarios, on both measures, Italy and Greece end the decade without ever having recovered their lost GDP. (The per capita figures for Greece look slightly better because its population has been falling since 2012.)

Let’s look at the growth projections then. True enough, the UK is forecast to be the fastest growing country in 2014. It seems that will only last for a year though.

GDP growth

All we are doing here is playing catch-up. Other countries have already recovered their pre-recession GDP. Our economy has to grow quickly to make up for having grown so slowly for the past four years.

The growth figures for Greece make an interesting comparison. If the IMF is right, for the second half of this decade, the Greek prime minister will be able to make speeches boasting that his country has one of the highest growth rates in the OECD and that it is outstripping anything the G7 countries have achieved since the recession. If he does, he’ll be right but, by 2020, his country will still not have fully recovered from the crash. All this growth will mean is that his country will be a bit less basket-casey than it is now.

If your economy has crashed and relatively low growth has followed, you need a big boost to catch up. For Greece, even four years of mega growth won’t be enough. For Britain, this year’s 2.9 percent, while welcome, is still not enough to catch up with the economies against which we usually compare ourselves.

The UK’s recovery is weak by historical standards as, to be fair, is that of the rest of the developed world. But our recovery has also been weak when compared to most of the G7. This year’s growth projection looks better than anything we have seen recently but it still feels like watching a slow moving river after a drought.

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5 Responses to Comparative recovery

  1. Pingback: Views From The Boatshed

  2. P Hearn says:

    Is GDP really a useful measure? If a government decides to borrow and spend, growth will look good because this daft measure doesn’t net off the increase in debt for example. Ergo, Greece’s original GDP was nonsense all along, so getting “back” to that level will be tough with a proper set of accounting principles applied.

    Should public spending, beyond what’s paid for in current tax receipts, be included in GDP at all?

    Agree entirely on the percentage growth thing being a con. Percentages should not be quoted without the actual figures being given at the same time. Often you hear that a type of crime has doubled, and it turns out cases have gone from two a year to four, or such like.

    In the end, anyone who believes any government statistics is probably on a hiding to nothing. GDP is a glorified guess and is revised more times than a religious text, so choose to believe what you will about the subject. If you can pay your bills and put a little aside, then things are probably getting better.

  3. Guy says:

    To continue with that, Mx Hearn, Japan will have a boost from rebuilding in the last few years after the quake and tsunami, but you wouldn’t usually class that as a good think..

  4. Nile says:

    If the economic growth results in gains for the top 1%, and nothing for the rest of us, is it a recovery at all?

    I suspect that inequality is hiding a continuing recession.

  5. Pingback: The (Economic) Madness of George | The Common Green

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