Stop press: We're not doomed (yet)!
There hasn’t been a massive amount of newspaper coverage about the LSE Growth Commission’s new report, which is perhaps unsurprising given that whereas many think tanks set out to shock with their reports, this one sets out to give a clear-sighted apolitical analysis of what’s going wrong (and right) in the UK economy.
And if there’s one thing that’s perhaps most striking about the report it’s that, in spite of all you hear elsewhere, the UK economy is not doomed. In fact, far from facing an economic apocalypse, Britain is pretty well-placed to recover from the current crisis and thrive in the future. Since 1980 GDP per capita in Britain has actually risen more than in the US, Germany or France – a statistic which might take you by surprise.
The Growth Commission puts this down to those unsexy things that really matter in economics: a strong rule of law, liberalised product markets and labour markets, decent universities and a few world leader firms in both services and manufacturing. It also calls for an improvement in schools and more autonomy for them, for an official advisory board for the Government on growth, for a proper public investment bank.
But enough from me. Go and read the report. In the meantime, here are some of the excellent charts from inside it.
The fall and rise of Britain
Back in the 1870s Britain had a far greater GDP per capita level than any other major economy. As you can see from the bar chart above, it was overtaken by the US by 1950, and then by France and Germany by 1979. But it managed to overtake the Europeans again by 2007.
The gender pay gap
As you can see from this chart, the wage gap for men and women is wider now than it was in the late 1970s and early 1980s.
Finance is not everything
This chart shows that in spite of many people’s perception to the contrary, finance contributed only 0.4% points to Britain’s productivity growth between 1997 and 2007 – only a touch up from the previous 18 year period.
The global investment crisis
The amount spent on investment is far lower today than it was in previous decades. This is a real problem – but it’s striking that it’s not merely the UK which should be worried. Britain and the US have had low levels of investment for decades.