The Telegraph, November 6, Roger Bootle
We all know that we are in one hell of a pickle and there is going to be a good deal of pain ahead. But how does the UK’s plight compare internationally?
Some commentators have referred to the UK as a basket case. This was the thrust of a recent article in the New York Times. It noted the symbolism of the recent death of Her Majesty the Queen and suggested that this marked the end of the second Elizabethan Age in more ways than one.
There is one respect in which the Man from Mars would look at Britain and conclude that it was indeed a basket case, namely the political shambles that have engulfed us over recent months. That has surely been unbecoming.
But is there a case for regarding the UK as a basket case purely on the economics? Mark Carney, the former Governor of the Bank of England, recently said that whereas the UK economy was some 90pc of Germany’s in 2016, the year of the Brexit vote, it is now less than 70pc, with Brexit the obvious leading explanation.
Exchange rate changes make inter-country comparisons of GDP perilous. The pound fell after the Brexit vote, reducing the size of the UK economy compared to Germany’s if you use market exchange rates. Yet, on a constant price basis, since 2016, the UK economy has grown slightly faster than Germany, at about the same rate as Spain and much faster than Italy.
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